Social Security Taxes Set to Rise

Higher-income Americans, about 6 percent of workers, will see an increase in payroll taxes in 2017 as the result of changes in Social Security taxable income levels. The higher revenues will support an increase in monthly benefits for retirees.

An Increase in Social Security Benefits in 2017 | Social Security Matters

The Social Security Administration recently announced the maximum amount of earnings subject to the Social Security tax would climb 7.3 percent to $127,200 in 2017 from the current $118,500. This is the largest jump in more than thirty years and will generate $1,078 per worker who reaches the contribution plateau.

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.

4 Comments

  1. Just to clarify, half that $1,078 comes from the employer and the other half you’ll see taken from your paycheck.

    I’m not quite as excited as Fritz is above since I’m not confident at all I’ll get any back from social security when my day comes.

    • ” … half that $1,078 comes from the employer.” Great point, and it should also be understood that not everyone will see this increase, only about 6% of workers, those who reached the previous plateau of $118,500 and the new $127,000 plateau.

      I’m with Fritz on the question of getting benefits down the line. While I believe there are issues with the system, there is nothing to suggest that one day the funds will just dry up and future retirees will get nothing. If nothing is done in the next 20 years or so, future retirees are projected to get about 75% of the benefits they should, not 0%. More importantly, a few tweaks to the system in the intervening years will fix that shortfall. Ultimately, I believe politicians will put off taking actions (e.g. extending the ages at which workers can claim benefits, means tests, etc.) that would be helpful to the program.

  2. Happy to contribute, I just hope I get it back…(technically, I KNOW it’s not my money I’m getting back…just saying). In my retirement cash flow plan, I’m only assuming I get 75% of my projected Social Security benefits. Better to be conservative and get a positive surprise along the way.

    • As I noted in my reply to The Green Swan, I do not believe the system is fundamentally broken and I expect that the wife and I will receive our benefits as currently projected. However, like you, I am conservative in my planning and could live quite comfortably in retirement if we got nothing from Social Security.

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