Social Security: What’s Changing in 2016?

Whether you will soon be applying for Social Security, or are already receiving benefits, here’s what you need to know about what’s changing (and not changing) in 2016.

What’s Not Changing

No Cost-of-Living Increase: Because inflation was unchanged from the third quarter 2014 to the third quarter 2015, there will be no increase in benefit payments to current recipients in 2016.¹

Tax Cap Remains Unchanged: For workers, the cap on wages subject to Social Security withholding stays at $118,500.²

Earnings Limit: The amount that any Social Security recipient can receive in compensation without a reduction in his or her Social Security benefits remains unchanged from 2015 at $15,720 (under the full retirement age) and $41,880 (the year an individual reaches full retirement age).³

Medicare Part B Premium: Since the law prohibits Medicare premiums from rising faster than Social Security benefits, most retirees will see no increase in Part B premium costs. However, first-time enrollees in 2016 and high-income Medicare beneficiaries may pay a higher premium.

What’s Changing

Better Customer Service: Look for online services to expand, self-service kiosks at field offices to increase and reduced wait-times for a hearing decision.

Benefit Maximization Strategies: The file-and-suspend and restricted application strategies that worked to maximize the income benefits from Social Security have been eliminated, though the law does provide some grandfather protections.

Elimination of Revoking Suspended Benefits: Individuals who filed for benefits and then suspended them to gain a future, higher payout previously had the flexibility to “un-suspend” benefits in the event of a life-threatening illness or change in financial circumstances and receive a retroactive lump sum payment. This flexibility will no longer exist.

  1. Social Security Administration, 2016. The Social Security Act specifies that cost of living are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers.
  2. “Fact Sheet: 2016 Social Security Changes,” Social Security Administration
  3. “Fact Sheet: 2016 Social Security Changes,” Social Security Administration

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2019 FMG Suite.

Share |
 

Related Content

Should You Tap Retirement Savings to Fund College?

Should You Tap Retirement Savings to Fund College?

There are three things to consider before dipping into retirement savings to pay for college.

Important Birthdays Over 50

Important Birthdays Over 50

Here's a look at several birthdays and “half-birthdays” that have implications regarding your retirement income.

Investment Strategies for Retirement

Investment Strategies for Retirement

Investment tools and strategies that can enable you to pursue your retirement goals.

 

Have A Question About This Topic?







Thank you! Oops!

Social Security: The Elephant in the Room

Some people wonder if Social Security will remain financially sound enough to pay the benefits they are owed.

Social Security: Five Facts You Need to Know

Here are five facts about Social Security that are important to keep in mind.

9 Facts About Social Security

There are things about Social Security that might surprise you.

View all articles

Inflation & Retirement

Estimate how much income may be needed at retirement to maintain your standard of living.

Saving for Retirement

This calculator can help you estimate how much you may need to save for retirement.

Potential Income from an IRA

Estimate your monthly and annual income from various IRA types.

View all calculators

Retirement Plan Distributions

There are a number of ways to withdraw money from a qualified retirement plan.

An Inside Look at Retirement Living

A number of questions and concerns need to be addressed to help you better prepare for retirement living.

Investment Strategies for Retirement

Investment tools and strategies that can enable you to pursue your retirement goals.

View all presentations

Social Security: By the Numbers

Here are five facts about Social Security that might surprise you.

Retiring the 4% Rule

A portfolio created with your long-term objectives in mind is crucial as you pursue your dream retirement.

How to Retire Early

Retiring early sounds like a dream come true, but it’s important to take a look at the cold, hard facts.

View all videos