YOUNGSTOWN, Ohio (WYTV) – As retirement rolls around, social security starts income to kick in, but the federal government is making changes to the two most popular ways to claim social security benefits.
Congress approved a deal that nixes two popular Social Security claiming strategies known as “file and suspend” and “restricting an application.” The plans meant to encourage older workers to stay on the job and delay claiming benefits. But as word of the strategies spread, more couples began to take advantage of the law and government officials took aim. In his 2014 budget, President Obama vowed to get rid of “aggressive” strategies that allowed “upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits.” according to a Kiplinger’s Report.
The changes to the guidelines are beginning to take effect this tax year.
But there is light at the end of the tunnel. The cost of living adjustment (COLA) changes each year for those who receive a social security income. COLA is based on the consumer price index from the third quarters of the previous two years.
In 2016, the COLA for retirees has stayed at $0 – no increase. But the amount changes each year.
“It’s re-evaluated every year. The COLA for the next year is announced in October, we will find out this October what it will be for 2017. It can really go up. It was high at 6 percent at one point. It is just based on inflation prices,” said Rachel Sheedy, Kiplinger’s Retirement Report managing editor.
Early retirees, age 62, who continue to work will temporarily forfeit $1 for every $2 of benefits over the earnings cap, which is a little higher than $15,000 for 2016. But once retirement age is fulfilled, there is no “earnings test” and 100 percent of benefits will be received.