If you’re already retired – or dreaming of that day – the notion of Social Security keeping up with inflation may have crossed your mind. After all, people claiming benefits get an annual cost-of-living adjustment (COLA).
But here’s the thing: there’s no guarantee those COLAs will keep up with inflation, or even a guarantee that there will be one.
For the first time in five years, the Social Security Administration (SSA) announced a COLA of at least 2%, which translates to about $27 more each month for the average retired worker in 2018. In 2017, it was just 0.3%, and in 2016 it was zero, zip, zilch.
Next year, the average retired worker is expected to receive about $1,404 a month, according to the Social Security Administration (SSA). Couples who both receive benefits can on average expected $2,340 a month combined.
Other adjustments Social Security announced for 2018 include:
The amount of wages subject to Social Security taxes increased about 1%, from $127,200 to $128,400.
Workers claiming benefits before reaching their full retirement age (FRA) may earn up to $17,040 a year (up from $16,920 in 2017) before they surrender $1 in benefits for every $2 in earnings.
Workers who reach their FRA in 2018 may earn up to $45,360 (up from $44,880) before they surrender $1 in benefits for every $3 in earnings. (Workers may earn whatever they can without penalty after reaching their FRA).
The maximum monthly benefit at FRA rises from $2,687 to $2,788.
Social Security’s retirement estimator can help you calculate your anticipated retirement benefits. If you already receive Social Security benefits, you can estimate your benefits after the 2% COLA by multiplying the gross amount by 1.02.
This article has been updated to reflect a change in the maximum amount of earnings subject to Social Security tax, due to an adjusted figure issued by the Social Security Administration on November 27, 2017.