Changes to Social Security in 2019
The Social Security Administration pays out retirement benefits to tens of millions of Americans. Even more workers pay taxes into the system every pay period. As a large government program, Social Security is difficult to administer, and it is always changing in small ways.
Things are no different in the new year. Below are some of the changes that retirees and workers can expect to see in 2019.
Larger Benefits Checks
Social Security benefits are designed to keep up with inflation, so there is an annual cost of living adjustment. For 2019, the adjustment will be 2.8 percent. The average beneficiary will receive $1,461 a month, up $39 a month from 2018.
If you are part of a married couple, you should see an average $67 increase each month, which will push the average payment to $2,448 a month. You should have seen these changes in the first payment in January.
Retirees Can Earn More Money
It is possible to continue to earn wages while drawing Social Security benefits, however there is a limit. If you go over the limit, then a portion of your benefits are withheld.
In 2019, any beneficiary who is age 65 or younger may bring home $17,640 before any benefits are withheld. This is $600 more than the previous year. Workers then lose $1 in benefits for every $2 earned over the limit.
In the year of a beneficiary’s full retirement age, they can earn up to $46,920, which is up $1,560 from 2018. After you reach this limit, you earn $1 less in benefits for every $3 in excess of the limit you earn.
Workers Could Pay Higher Taxes
Workers pay 6.2% of their wages into the Social Security system. However, not all income is taxed. Instead, taxable income is capped at $128,400. In 2019, the cap will rise to $132,900, an increase of $4,500. If you earn more than the cap, then you stop paying taxes on the amount in excess, so you will see an increase in your wages at that point.
Workers Must Earn More to be Eligible
Not everyone who works qualifies for Social Security retirement benefits. Instead, you must accrue at least 40 lifetime work credits. This metric is based on your income. Last year, a worker received one credit for each $1,320 she earned, up to a maximum of 4 credits a year.
In 2019, a work credit is based on $1,360 of income—or $40 more than in 2018. This means someone just starting out will need to earn an extra $1,600 for the full 40 work credits.
Retirees Need to Wait Longer for Full Benefits
Workers can start drawing benefits at age 62. But if they wait, they can claim full retirement benefits. If you were born in 1957, you can claim full retirement benefits at age 66 and six months. For those born in 1956, they can claim full benefits at age 66 and four months.
Workers will need to wait longer going forward. The full retirement age will hit age 67 for everyone born on 1960 or later.
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