COLA & Earnings – What’s New In 2019
People who claim Social Security benefits before they reach full retirement age need to review the 2019 Social Security cost-of-living adjustment to determine whether changes may temporarily reduce their benefits.
“Employed people who also claim early retirement benefits need to be aware that there is a threshold in the amount of money they can earn, and any amount over that threshold means a temporary reduction in Social Security benefits,” said Dan Weber, founder and CEO of AMAC, the Association of Mature American Citizens. Weber recommends that people who are working while collecting Social Security benefits prior to reaching full retirement age should talk with their tax advisors.
For workers who receive benefits before your full retirement age:
For those born from 1943 to 1954 – If you claim Social Security Benefits before age 66, the earning limit will increase from $17,040 in 2018 to $17,640 in 2019. This means that Social Security will withhold $1 in benefits for every $2 earned above the limit.
For those who turn 66 (full retirement age) in 2019, the earnings will increase from $45,360 in 2018, to $46,920 in 2019. This means that Social Security will withhold $1 from benefits for every $3 earned over the limit – until the month you turn 66.
The earnings test ends once you reach full retirement, which is based on your birthdate as outlined by Social Security.
Social Security Benefits Increase in 2019
The Social Security Administration announced that in 2019 an increase of 2.8% in benefits will be given to Social Security and Supplemental Security Income (SSI) beneficiaries. Increases in the consumer price index (CPI) affect the annual cost-of-living-adjustments, as determined by the U.S. Department of Labor.
In 2019, Social Security Beneficiaries will see an increase in the average benefits from $1,422 to $1,461. The maximum taxable earnings will also increase from $128,400 in 2018 to $132,900 in 2019. This means that earnings up to that limit are subject to Social Security tax.
Interesting Fact: Did you know you qualify for Social Security benefits when you have earned 40 Social Security “credits” –also known as “quarters of coverage.” In 2019, one credit now equals $1,360 in earnings (it was $1320 in 2018). AND, you can only earn 4 credits each year.
Medicare Note: The Part B Medicare Premium will increase from $134 in 2018 to $135.50 in 2019, for those individuals earning $85,000 or less, or joint filers earning $170,000 or less. The annual Medicare Part B deductible increased from $183 in 2018 to $185 in 2019.