Changes to Social Security and the Impact on you
After receiving no cost-of-living adjustment (COLA) for 2016, the Social Security Administration announced on Tuesday, October 18th that benefit recipients shall receive a 0.3% COLA for the 2017 year. This means an individual who received $15,000 in Social Security benefits for 2016, will now receive $15,045 for 2017. These adjustments are made to keep pace with rising consumer prices, in order to keep an individual’s purchasing power on pace with inflation. In addition, the administration also announced the cap on earned income subject to the social security payroll tax will increase from $118,500 to $127,200 for the 2017 year. FICA taxes for Social Security are calculated on an individual basis, with the cost of the taxes being split right down the middle between employee and employer, each paying 6.2%. This means if an individual earns $127,200 or higher in 2017 they will contribute $7,886.40 to Social Security, which is an increase of $539.40 from 2016. To figure out how much you’re projected to contribute in 2017, take your projected earnings and multiply it by .062, this is your projected contribution to Social Security, again, remember the cap is $7,886.40. Lastly, as a reminder, those that are self-employed are responsible for paying the full 12.4% for the Social Security payroll tax.
