Welcome to a new year readers. We survived 2018! What does 2019 have in store for us? This week’s blog will address the Social Security changes in 2019 that have been put into place.
Below are 6 Social Security changes in 2019.
- Beneficiaries receive a pay raise
- Medicare Part B
- Earnings limit rises
- 2019 Social Security changes the maximum taxable earnings
- Maximum 2019 Social Security changes benefit increase by $73
- Social Security credits
For the first time in 6 years, beneficiaries will receive a COLA over 2%. This year Social Security beneficiaries will receive a 2.8% cost-of-living adjustment (COLA). That’s the highest COLA we’ve seen since 2012. Beneficiaries will begin seeing the awarded 2.8% COLA effective this month. The Social Security Administration estimates that the average paid retiree benefit will increase from $1,422 to $1,461.
This medical insurance premium has seen a small increase from $134 in 2018 to $135.50 in 2019.
If you draw your Social Security benefit before you reach your Full Retirement Age (FRA), you will be subject to the Social Security earnings limit. See the comparison chart below.
If you reach FRA after 2019 and exceed the $17,640 earnings limit while drawing a Social Security benefit, $1 of your benefit will be withheld for every $2 you make over that limit.
If you reach FRA in the year 2019, $1 of your Social Security benefit will be withheld for every $3 over $46,920 you earn while employed and drawing a Social Security benefit. The reduction applies only to earnings made in the months prior to your birth month.
If you have already reached your FRA, the earnings limit will not apply to you.
The Social Security maximum earnings subject to tax has also increased from $128,400 in 2018 to $132,900 in 2019.
For example, if you earn $175,000 in Social Security covered employment this year, $132,900 of that $175,000 will be subject to Social Security taxation. The remaining $42,100 will not have Social Security taxes withheld.
Since the maximum taxable earnings increased, so did the maximum benefit drawn. This year, the highest benefit payable to someone claiming Social Security at FRA is $2,861/month. Granted this amount could grow if an individual postpones receiving a Social Security benefit.
To be eligible for a Social Security benefit, you must have at least 40 quarters. This year, one Social Security credit is equivalent to $1,360 in earnings. That amount increased by $40 in 2019. That doesn’t sound like a big amount, however keep in mind that you are only allowed to earn four credits each year.
As we all know, laws are constantly changing. It’s important to stay in-the-know about what those changes are so that you can better prepare for retirement.
