Get in the Know: Social Security and IRS Updates for 2018
The new year will bring several changes that could affect your Social Security benefits and retirement savings.
Last October, the Social Security Administration announced cost-of-living adjustments for 2018 benefits. Starting in January, monthly Social Security and Supplemental Security Income (SSI) benefits will increase by 2.0 percent,1 which will yield approximately $25 extra a month for the average beneficiary.2
For individuals still in the workforce, the maximum amount of earnings subject to the Social Security tax will increase from $127,200 to $128,700. This increase will cause about 12 million American workers to pay more in Social Security taxes.3
From a retirement savings perspective, there is some good news from the IRS in 2018: Employees may increase 401(k) contributions to $18,500 — a $500 boost over the past few years. The maximum contribution (employer and employee combined) will increase by $1,000 for a total of $55,000 a year. Unfortunately, there is no change for the “catch-up” contribution for people age 50 and older, which will remain at $6,000.4
IRA contributions, including the catch-up provision, will also stay the same at $5,500 and $1,000, respectively.5
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This content is provided for informational purposes only. It is provided by third parties and has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.We are not affiliated with any government agency including the Social Security Administration.
1 Social Security Administration. Oct. 13, 2017. “Social Security Announces 2.0 Percent Benefit Increase for 2018.” https://www.ssa.gov/news/press/releases/#/post/10-2017-1. Accessed Nov. 16, 2017.
2 Newsmax.com. Oct. 13, 2017. “Social Security Benefits to Get Another Modest Boost in 2018.” https://www.newsmax.com/US/social-security-cost-of-living-adjustment-cola-2018/2017/10/13/id/819445/. Accessed Nov. 16, 2017.
3 Emily Brandon. U.S. News & World Report. Oct. 16, 2017. “Social Security Changes Coming in 2018.” https://money.usnews.com/money/retirement/social-security/articles/2017-10-16/social-security-changes-coming-in-2018. Accessed Dec. 11, 2017.
4 IRS. Oct. 19, 2017. “IRS Announces 2018 Pension Plan Limitations; 401(k) Contribution Limit Increases to $18,500 for 2018.” https://www.irs.gov/newsroom/irs-announces-2018-pension-plan-limitations-401k-contribution-limit-increases-to-18500-for-2018. Accessed Dec. 11, 2017.
5 Ibid.
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