Social Security recipients will receive a raise in 2019. The Social Security Administration recently announced that it will make a 2.8% cost-of-living adjustment (COLA) to benefits. It announced some other changes too, affecting both workers and retirees. Read on to see six of the changes that may affect you.
COLA Gets the Largest Boost Since 2012
The 2.8% increase follows a 2% boost for 2018, and is the largest increase since 2012, when the adjustment was 3.6%. With the latest jump, the average benefit for Social Security recipients will climb from $1,422 to $1,461 per month.
You’ll also be able to view your COLA notices online beginning this month. You can see how much you will receive over the next calendar year by logging in to your My Social Security message center. Note: You’ll still receive a paper notice, and online notices won’t be sent to representative payees, recipients with a foreign mailing address, and those who pay higher Medicare premiums due to their income.
You’ll Have to Wait Longer to Claim Full Benefits
Social Security has been incrementally moving full retirement age forward to 67. Full retirement age (FRA) is the age at which you can claim your full retirement benefit—if you retire earlier, you’ll receive less. So if you were born in in 1956, your FRA is 66 and four months. If you were born in 1957, your FRA is 66 and six months.
Want to quickly determine your FRA? Check out the Social Security Administration’s chart.
And by the way, if you delay past FRA, your monthly benefit check will increase for each year up to 70. Wait until 70, and you’ll receive a 76% higher payout than if you had claimed benefits when you were first eligible at 62.
You Can Earn More If You’re Working and Receiving Social Security
If you’re receiving Social Security and still working, you can earn a bit more before the Social Security Administration starts docking your paycheck.
If you won’t reach FRA in 2019, you'll be able to earn $17,640, up from $17,040 in 2018. Beyond that, $1 out of every $2 of income will be withheld. (You'll recoup the money via increased monthly benefits once you reach FRA.)
If you're reaching FRA in 2019, you can earn up to $46,920, up from $45,360. You will then see $1 deducted out of every $3 you earn—that is, until you reach FRA. At that point, the earnings limit no longer applies.
High-Income Workers Will Have More of Their Dollars Taxed …
The maximum amount of income that can be taxed is increasing from $128,400 to $132,900. However, the tax rate of 6.2% will remain the same.
… But They Can Also Receive a Larger Social Security Check
On the flip side of the increase in taxable earnings, the Social Security Administration will increase the maximum monthly benefit you can receive.
In 2018, the amount was $2,788. In 2019, the amount will be $2,861.
You’ll Need to Earn More to Receive Credit
The final change you should be aware of is an increase in the work credit threshold. This is the threshold that the Social Security Administration uses to determine your eligibility for benefits.
You need 40 work credits to qualify for Social Security, and you are able to earn up to four credits annually. In 2018, a credit required at least $1,320 in earned income. For 2019, that threshold will increase to $1,360.