The Social Security Administration announced late last week the COLA (Cost of living adjustment) based not he CPI, Consumer Price Index (see graph below) would be a 2% increase.
Three Important Numbers
2% – The increase in ALL Social Security benefits for 2018
$128,700 – The phase out level of Social Security withholdings – Medicare 3% does not phase out anymore
$17,040 – The maximum amount of employment related income you can earn AND draw Social Security early without facing a dollar for dollar tax above this amount
The CPI – Consumer Price Index
The Consumer Price Index (CPI) (to be exact, it is the CPI-W for clerical workers and wage earners- it looks exactly the same) is the basic index living adjustments for Social Security (and many other instruments) are used.
As you can see the line is generally up, but there are years that no adjustment is made!
Happy 2% raise next year!
John A. Kvale CFA, CFP