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2019 Important Changes to Social Security

By: Financial Hotline
Winter 2019 (Vol. 36, No. 4)

Increase in benefits. More than 67 million Social Security beneficiaries will see a 2.8% cost-ofliving adjustment (COLA) which is meant to help offset the effect of inflation. This represents a 0.8% increase over last year’s 2% COLA and the largest increase since 2012 when benefits went up 3.6%. For the average Social Security recipient, this raise will amount to around $39 per month (average monthly payout increased from $1,422 in 2018 to $1,461 in 2019).

Maximum taxable earnings will increase to $132,900. Last year, employees paid a 6.2% Social Security tax on income up to $128,400. Any earnings above that amount were not subject to the tax. In 2019, the tax rate will remain the same at 6.2%, but the tax cap will increase to $132,900.

Increase in maximum amount of earnings used by the SSA to calculate retirement benefits. In 2018, the maximum monthly Social Security benefit for a worker retiring at full retirement age was $2,788. In 2019, the maximum benefit increases $73 per month to $2,861.

Full retirement age. The earliest you can start claiming Social Security retirement benefits remains at 62 but, claiming before your full retirement age will result in the payout being permanently reduced. For those who turn 62 in 2018, full retirement age is 66 and four months. But for those who turn 62 in 2019, the full retirement age will increase to 66 and six months. Full retirement age is set to increase by two months each year until it hits 67. So, for anyone born in 1960 or later, full retirement age will be 67. The option to put off claiming until age 70 will still reap a 76% higher annual payout than if you started receiving benefits at 62.

Earnings limits will increase. If you are collecting benefits prior to full retirement age and you continue to work, all or part of your benefits may be temporarily withheld, depending on how much you earn. However, the amount you can earn before triggering a reduced benefit increases in 2019. Prior to reaching full retirement age, you will be able to earn up to $17,640 in 2019. After that, $1 will be deducted from your payment for every $2 that exceeds the limit. This reflects a $600 increase over 2018’s limit of $17,040. If you reach full retirement age in 2019, you will be able to earn $46,920 – an extra $1,560 from 2018’s $45,360 annual limit. For every $3 earned over the 2019 limit, your Social Security benefits will be reduced by $1, but it will only apply to money earned in the months prior to hitting full retirement age. Once you hit full retirement age, no benefits will be withheld if you continue working.

Social Security disability thresholds will increase. The legally blind will receive a maximum of $2,040 a month, an extra $70 a month over last year. For the non-blind, the maximum benefit increases $40 a month to $1,220.

View your COLA notice online. For most Social Security recipients this new feature allows you to view your COLA notice online through your My Social Security account. Notices will still be mailed this year, but in the future, recipients will be able to choose whether to receive their notice online or by mail.

Increase in work credit earnings. Workers earn their social security benefits by accruing 40 lifetime work credits, with a maximum of four credits earned per year. These credits are based on your earned income. In 2018, $1,320 in income equaled one lifetime work credit $5,280 would earn you the full four credits)$1,360 in income to earn a work credit, or $5,440 (an extra $160 in income) to max out your four per year. This year you will need $1,360 in income to earn a work credit or $5,440 to earn the full 4 credits for the year.