8 Changes to Social Security in 2018

For 2018, the basic structure of Social Security is the same in terms of how workers are taxed and how benefits are calculated and paid. However, there are a few notable changes to be aware of, such as the gradually increasing full retirement age and several thresholds and other Social Security figures that adjust over time with inflation.

With that in mind, here's a rundown of eight 2018 Social Security changes that are set to go into effect.

1. The full retirement age is increasing for some eligible seniors

The full or normal retirement age for Social Security benefits has been 66 years of age for some time now, but is set to gradually increase to 67 for Americans born after 1954.

If you were born in...	Your full retirement age is...
1954 or earlier	66 years
1955	66 years, 2 months
1956	66 years, 4 months
1957	66 years, 6 months
1958	66 years, 8 months
1959	66 years, 10 months
1960 or later	67 years

DATA SOURCE: SOCIAL SECURITY ADMINISTRATION.

The reason this is important now is that the change has begun to affect people who are reaching the age of eligibility for Social Security benefits. Specifically, Americans who will turn 62 in 2018 (born in 1956) have a full retirement age of 66 years and four months, and those who will turn 63 in 2018 have a full retirement age of 66 years and two months.

Here's why this is important. Since most Americans claim Social Security before they reach full retirement age, this means that early retirement will have a more dramatic reduction. For example, if a worker with a full retirement age of 66 claims at 62, he or she would face a 25% reduction. If their full retirement age is 66 years and four months, the reduction percentage would be 25.8%.

2. Finally, a decent cost-of-living adjustment for retirees

The Social Security Administration announced a 2% cost-of-living adjustment, or COLA, for beneficiaries, starting with the December 2017 payment.

This is the highest COLA in six years, and is due to higher inflation -- specifically, the rise in the CPI. However, this is still historically low. Social Security COLAs have averaged roughly 3.8% since the current method was implemented in 1975. Furthermore, for many retirees, this year's increase could be consumed by rising Medicare Part B premiums.  Click here to continue reading.