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Retirees will see the largest increase in their Social Security benefits in seven years come January. But the higher cost-of-living adjustment is not the only way the system will change in 2019.
Other changes that will take effect in 2019 include:
1. Full retirement age will continue to climb
What the Social Security Administration (SSA) calls “full retirement age” or “normal retirement age” is the age at which you become eligible to receive your full Social Security retirement benefit, as opposed to a reduced amount.
You can generally claim benefits once you reach age 62, but full retirement age is at least 65, depending on when you were born.
For Americans born in 1957 — meaning they will turn 62 in 2019 — full retirement age will increase to 66 years and 6 months. That is two months later than it was for folks who turned 62 in 2018.
If you are unsure of your full retirement age, use SSA’s retirement age calculator.
2. The earnings limit for working retirees will increase
If you claim Social Security retirement benefits before reaching full retirement age and also are still working, SSA can withhold some of your benefits.
That action depends on whether you earn more than a certain amount.
For 2019, that amount will increase:
- From $17,040 to $17,640 if you will reach full retirement age after 2019
- From $45,360 to $46,920 if you will reach full retirement age in 2019
To learn more about this topic, check out “The Danger of Working While Collecting Social Security.”
3. The tax cap on workers’ income will increase
The maximum amount of a worker’s income that is subject to Social Security payroll taxes will rise from $128,400 to $132,900. So, if you’re fortunate enough to earn more than $132,900, you won’t owe Social Security taxes on every last dollar you earn.
The payroll tax rate for workers will remain the same in the new year: 6.2 percent from employees and 12.4 percent from the self-employed.
What’s your take on Social Security in the new year? Sound off below or over on our Facebook page.