Providers of medical review services for disability attorneys need to keep updated with the latest announcements from the Social Security Administration and this is something we are very diligent about at MOS. In their recent Fact Sheet for 2017, the administration announced that the maximum amount of wages in 2017 subject to the 6.2% Social Security tax (old age, disability insurance, survivor) will increase from $118,500 to $ 127,200. This is an increase of more than 7%. In 2016, the wage base remained unchanged from that in 2015. In 2017, the maximum amount of SS tax a taxpayer will have to pay will also therefore increase from $7,347 (in 2016) to $7,886.40. Other increases for the year 2017 include the following:
- 0.3% increase in COLA (Cost of Living Adjustment)
- The amount a worker under full retirement age can earn before he/she has their SS benefits reduced: The limit will increase from $15,720 a year to $16,920 for 2017, after which $1 in benefits will be withheld for every $2 earned above the limit.
- The amount a worker at full retirement age can earn: The limit will rise from $41,880 a year to $44,880 a year. (Applies only to earnings for months prior to attaining full retirement age. One dollar in benefits will be withheld for every three dollars in earnings above the limit. There is no limit on earnings beginning the month a person attains full retirement age.)
When to claim retirement benefits is a question in the minds of many people. The earliest one can claim benefits is at age 62. It is estimated that more than forty percent of workers opt to begin receiving checks at that time. Recent research from the Boston College’s Center for Retirement Research shows that an increasing number of workers are waiting until their mid sixties or later. For a person claiming at 62 instead of 66/67 which is the “full retirement age”, his/her payout will be 25% less. Though the general recommendation is to wait as long as one can, there are certain circumstances such as the following when it is better to claim early.
- When one is disabled and cannot work: For those collecting a disability benefit on the basis of his/her employment record, the disability benefit automatically converts into a retirement benefit when they reach full retirement age. If they don’t have any other income or only a small amount of savings which they would rather not disturb, they can proceed to claim their benefits.
- In the event of a sickness/bad health condition: People with a chronic illness or a shorter life expectancy than most others, would do best to claim SS benefits at their full retirement age or sooner. Though delaying the claim will bring more money, there is not much logic in it if one doesn’t have enough years past 70.
- When there is no other dependant: If nobody else is eligible for the claimant’s benefits after his/her death, and the claimant requires the income or don’t want to take money from his/her savings, they can file early.
While it is true that claiming retirement benefits early would be the better choice in the above mentioned circumstances, disability lawyers and financial advisors among other experts would agree that delaying claiming one’s benefits until age seventy is a good idea. By doing so, the monthly amount a person receives would increase by around eight percent for each year one waits beyond his/her full retirement age.