On November 27, the Social Security Administration (SSA) updated the 2018 taxable maximum amount, based on a national payroll service provider’s corrected Internal Revenue Service (IRS) Forms W-2 (Wage and Tax Statement) provided to the agency in late October 2017, after the SSA announced cost-of-living adjustments (COLAs) for 2018. The new data lowers the national average wage index for 2016, which in turn reduces the 2018 Social Security taxable maximum amount (also known as the taxable wage base or the contribution and benefit base), the primary insurance amount (PIA) bend points used to calculate benefits, and the family maximum bend points.
The adjusted figures are:
• The 2018 Social Security taxable wage base: $128,400 (corrected from $128,700).
• The 2018 PIA bend points that are used to determine individual beneficiaries’ Average Index Monthly Earnings (AIME): $895 and $5,397 (corrected from $896 and $5,399). Thus, the monthly PIA formula will be 90% of the first $895 of AIME, plus 32% of the AIME over $895 and through $5,397, plus 15% of the AIME over $5,397.
• The 2018 bend points in the family maximum formula: $1,144/$1,651/$2,154 (corrected from $1,145/$1,652/$2,155).
• The 2016 national average wage index: $48,642.15 (corrected from $48,664.73).
Milliman has posted a revised Client Action Bulletin (CAB 17-4R) to reflect the Social Security Administration’s adjusted figures.
For additional information about the 2018 updated Social Security figures, please contact your Milliman consultant.