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The big news for Social Security in 2018 is a small pay hike for the program’s 61 million beneficiaries. The average monthly payment will go up by 2 percent: from $1,377 to $1,404 next year.
It’s not much—and, worse, not everyone will see that extra money in their check because of the way deductions for Medicare premiums are taken (see more on this below). But it’s noteworthy because it represents the first significant cost-of-living adjustment (COLA) since 2012, when there was a 3.6 percent hike. Last year, seniors got just a 0.3 percent increase, and there was no raise at all in 2016.
“Any cost-of-living adjustment is welcome if you’re on a fixed income,” says Jonathan Peterson, author of “Social Security for Dummies” (For Dummies, 2012). “But this one doesn’t amount to much. For millions of people, the price of necessities like healthcare and prescription drugs is rising a lot faster than 2 percent.”
Other changes to Social Security are on the horizon for next year as well—small but significant tweaks that could affect you, no matter what your age. That makes now a good time to understand the intricacies of how this important program works, so you will be able to make the right planning and claiming decisions.
A 2017 survey by The Nationwide Institute found that 91 percent of people don’t know what factors determine the maximum payout they can receive—a lack of awareness that can cost you big bucks if you file for benefits earlier than necessary. Today almost two-thirds of retirees rely on their monthly check for at least half of their income, and for about for a third, it represents 90 percent or more.
To avoid making claiming mistakes, pay attention to these Social Security changes taking place next year:
If You’re on Medicare, You Probably Won’t Get Much of a Benefit Increase in 2018
Even though Social Security payments will rise next year, much of that will be offset by increased Medicare premiums (Part B premiums are typically deducted from Social Security checks.)
“About 70 percent of Social Security beneficiaries on Medicare will only see an increase of about 2 dollars in their monthly check,” says Dan Adcock, a policy expert at the National Committee to Preserve Social Security and Medicare (NCPSSM), an advocacy organization in Washington, D.C.
The remaining 30 percent who don’t pay Part B premiums will see that 2…