CMP Financial Planning

Social Security Benefits to Remain Flat in 2017


Because of the low inflation figures contained within the CPI index that determines Social Security increases, Social Security benefits are set to go up a mere 0.3% starting in January 2017.  If, for example, you currently receive $2,000 per month from Social Security, your payments will go up by a negligible $6 per month. Compounding this gloomy news is the fact that for most of our readers who have single modified gross income under $85K or joint $170K, the Medicare B “standard” premium is set to increase from $121.8 to $134 per month, or an increase of $12.20 per month.

However, under federal law, if a recipient receives Social Security benefits and has Medicare part B insurance, the part B premium increase is limited by the amount the recipient’s Social Security benefit is increased-they are “held harmless” from the Medicare B premium rise. (In the example given, the part B premium increase would be to $6, not $12.20.)  Therefore, Social Security benefits, after subtracting out Medicare B premiums, will not rise in 2017 from 2016 for most people. Not great news since many of you are facing real increases in expenses, but it could be worse!  There are many who have Medicare B insurance and are not yet withdrawing Social Security benefits. These people will be paying the entire monthly Part B increase in premiums.

Tax Reminders : While the deadline to fund IRAs and HSAs for 2015 is April 15, your 401k/403b and 529 deadline for contributions is the end of the calendar year on 12/31. Generally 2016 and 2017 have the same limits with the exception of Individual HSA’s (?!)

 

2016 and 2017 limits / with catch up

IRA:                             $5,500 ($6,500 age 50+)

401k/403b:              $18,000 ($24,000 age 50+)

HSA, Individual:               $3,400 ($4,400 age 55+) (2016: $3,350 ($4,350 age 55+)

HSA, Family:                    $6,750 ($7,750 age 55+)

 

Special note for 529 college education accounts: Computers are now a qualified college education expense again for which you can use 529 proceeds!

 

By Barry Jamieson, CFP, MA