Advertisement
Economic Forecasts

Seniors, Savers Benefit From Cost-of-Living Increases in 2018

Higher inflation has its advantages.

Inflation remains at historic lows, but a modest uptick in 2017 means retirees will get a small raise, and workers will be able to save more money in tax-favored retirement accounts.

Social Security beneficiaries will get a 2% cost-of-living adjustment in benefits this year, the largest increase since 2012. That raises the average monthly payout for a retiree by $27, to $1,404. The maximum monthly payout for someone retiring at full retirement age (currently 66) is $2,788, up about $100.

Advertisement - Article continues below

However, there’s a good chance that most, if not all, of the increase will be consumed by higher Medicare premiums, which in most cases are deducted from Social Security benefits before the money hits your bank account. The basic Medicare premium will likely be $134 a month in 2018, or $25 more than the average premium paid by most enrollees in 2017. If you’re getting the average hike in Social Security, that would leave just $2 more a month.

For those still saving for retirement, contribution limits for 401(k) and other employer-provided retirement savings plans will increase by $500. Maximum contributions to health savings accounts will go up, too. Limits for traditional and Roth IRAs will remain at $5,500 ($6,500 if you’re 50 or older).

Advertisement
Advertisement - Article continues below

But for high-income workers, there’s a downside to inflation. Workers will pay Social Security taxes on up to $128,400 in earnings, up from $127,200 in 2017. That means workers who earn more than the 2017 limit will fork over up to an additional $93 to Uncle Sam.

Advertisement

Most Popular

Chiropractor Trying to Get Business the Wrong Way – Illegally
careers

Chiropractor Trying to Get Business the Wrong Way – Illegally

A new chiropractor’s fledgling business plan to attract patients may sound reasonable at first look, but it’s actually against the law, and the same p…
June 30, 2020
What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
13 Luxury Goods That Are Cheaper at Costco
spending

13 Luxury Goods That Are Cheaper at Costco

You could be missing out on huge savings: Costco sells a limited selection of luxury goods at discounted prices, both in-store and online.
June 27, 2020

Recommended

14 Social Security Tasks You Can Do Online
retirement

14 Social Security Tasks You Can Do Online

Why visit a government office to get your Social Security business done? You can do much of that online.
June 26, 2020
Did You Know You Can Start, Stop and Then Restart Social Security?
social security

Did You Know You Can Start, Stop and Then Restart Social Security?

Check out Social Security claiming strategies (some familiar and others you may never have heard of) that could help those in or near retirement durin…
June 29, 2020
Retirees Get Another Break with Expansion of RMD Waiver
required minimum distributions (RMDs)

Retirees Get Another Break with Expansion of RMD Waiver

The CARES Act cancelled "required minimum distributions" for 2020...and the IRS just expanded that relief to help more seniors and give more time to u…
June 24, 2020