Below we have listed some of the most important changes taken into effect since Dec 31, 2018 for the year 2019, according to the SSA fact sheet.
- 1.You are getting a 2.8% raise
More than 67 million people depending on income from disability benefits would get a 2.8% increase due to the increase in Cost-of-Living-Adjustment, COLA. The Bureau of Labor Statistics, BLS calculates the increase in Consumer Price Index, CPI to make adjustments with the inflation rates. This is to ensure that your income would be enough in relation to the buying power. So you will be getting a 2.8% increase in monthly benefits this year as of 2019.
The average benefits of an individual on social security are expected to jump from $1422 (2018) to $1461 (2019). Although it doesn't seem much but it is estimated monthly increase is $39 or $468 a year.
- 2.Social Security maximum earning limits have climbed
The Social Security will reduce your benefits if you are working up late till your retirement age (between 62 and 66 years of age) or 67 (full retirement age). The SSA deducts every $1 for $2 of your earnings you earn while working and receiving social security benefits.
For instance for year 2019, if you reach full retirement age after 2019, your 2018 earnings limit would be $17,040 per year ($1420 per month) and your 2019 earnings limit would be $17,640 per year. ($1,470 per month). If you'll reach full retirement age during 2019, your 2018 earnings limit would be $45,360 per year ($3,780 per month), and your 2019 earnings test limit will be $46,920 per year. ($3,910 per month).
- 3.More earnings will be subject towards work credits
To qualify for social security you need at least 40 work credits. For 2019 one credit would be equivalent to $1360 in earnings, seeing an increase of $40 since the year 2018 which translated $1320 to one credit.
This means you can now avail more earnings towards work credits. Although this doesn't seem much in the long-run it is necessary to ensure that no matter how much you earn you can translate your earnings to 4 work credits each year.
- 4.Maximum taxable earnings have increased to $132,900
Up until 2018 employees and independent workers such as business men and freelancers were required to pay upto 6.2% taxes on their earnings to social security taxes. The employers matched that payment on income upto $128,400. Any earnings you made above that amount were not subject to taxes whatsoever. However, in 2019 the tax rate will remain pretty much the same (6.2%) but the cap has now increased to $132,900. This means that your earnings up to $132,900 per year would be subject to a 6.2% tax in social security taxes.
- 5.Full retirement age will increase even further
The absolute earliest age at which you are able to claim your social security taxes is 62. Though you can still claim your benefits earlier, it will result in a permanent lowered payout. However, the full retirement age up to which you can claim your taxes to full benefits has increased from (66 years and 4 months in 2018) to (66 years and 6 months in 2019).
- If you are like most Americans you would obviously want to maximize your social security taxes. Fortunately many people born after 1960 are still a few years from their full retirement age. And it is wise to know that knowing some clear cut social security secrets can greatly enhance your benefits when you decide to claim them. You can do this by talking to a social security attorney to guide you to a full social security plan.