Social Security Update
Submitted by MIRUS Financial Partners on March 10th, 2015
You may be hearing news about changes in Social Security. There have been a number of adjustments, but for now, let’s focus on changes in benefit increases, changes in early test amounts, and tax guidelines.
1.7% Benefits Increase:
In 2015, Social Security benefits will increase 1.7%. This is the fourth annual cost-of-living adjustment. What does that mean in dollars? The average retired couple gets a $36 monthly increase, bring the average monthly payout to $2,176. A single retiree claiming benefits at the full retirement age of 66 in 2015 could now be eligible for a maximum monthly Social Security payment of $2,663.1
Early Retirement Test Amounts Rise to $15,720
Under the social security system, retiring workers 62-65, not yet at the full retirement age, but who opt to collect social security, are subject to a retirement earnings test. This test effectively defers benefits for people whose earnings are above a given threshold. If you receive Social Security benefits and you will be younger than full retirement age at the end of 2015 (62-65), $1 of your benefits will be withheld for every $2 that you earn above $15,720. The 2014 limit was $15,480).2
Full Retirement Test Amounts Rise to $41,880
If you receive Social Security benefits and reach full retirement age during 2015 (age 66), then $1 of your benefits will be withheld for every $3 that you earn above $41,880. Upon turning 66, your Social Security benefits are never reduced because of earned income levels.2
Tax Updates
As always, part of your Social Security benefits may be taxed if you exceed the program’s “combined income” threshold. As a reminder: combined income is your adjusted gross income + non-taxable interest + 50% of Social Security benefits.3
- In 2015, single filers with a combined income between $25,000-34,000, may pay federal income tax on up to 50% of your Social Security benefits. 3
- Joint filers with combined incomes of $32,000-44,000 may also owe income tax on up to 50% of Social Security benefits.3
- You may have to pay federal income tax on up to 85% of your 2014 Social Security benefit if you are a single filer with a combined income of more than $34,000. 3
- Joint filers with combined incomes over $44,000 may also owe federal income tax on up to 85% of 2014 Social Security benefits.4
It unclear how taxes will change for married couples who are filing separately. According to www.ssa.gov, couples will “probably” have their benefits taxed in 2015. • Finally, the Social Security wage base increased by $1,500 in 2015. Individual wages up to $118,500 are subject to payroll tax.4
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Mark A. Vergenes is President of MIRUS Financial partners, 110 E. King St., Lancaster. You may contact him at 717-509-4521 mark@mirusfinancialpartners.com or at www.mirusfinancialpartners.com.
Investment Advisor Representative offering securities and advisory services offered through Cetera Advisor Networks LLC., member FINRA/SIPC. Cetera is under separate ownership from any other named entity. MIRUS Financial Partners nor Cetera Advisor Networks LLC. give tax or legal advice. Opinions expressed are not intended as investment advice and it may not be relied on for the purpose of determining your social security benefits, eligibility, or avoiding any federal tax penalties. All information is believed to be from reliable sources; however we make no representations as to its completeness or accuracy. All economic and performance information is historical and indicative of future results.
