Everyone knows how important Social Security can be for senior citizens and retirees.
According to the Center for Budget and Policy Priorities, Social Security provides benefits for 15 million retireeswho would otherwise be living below the poverty line.
Changes to this program can certainly stress people out and that’s why we need to look at several specific changes coming in 2019:
- Raises are coming—The first big change is a very positive one. Every year, recipients of Social Security get a cost of living adjustment (COLA) to help offset the rise in prices for goods and services. This year, the COLA is the biggest in seven years—2.8%. This may not seem like a lot, but for those who are trying to live on a fixed income, every little bit can help.
- Retirement age is going up (again)—In 2019, the full retirement age will be climbing once again. Now, in order to get your full retirement benefit, you will have to wait until you reach 66 years and 6 months (as opposed to 66 years and 4 months in 2018). This will also continue to rise for the next few years until it finally reaches 67 in 2022. If you choose to retire before this age, you will permanently reduce your monthly payment.
- Some monthly payments are going up, too—In 2019, a retired worker will be able to earn no more than $2,861 a month, an increase from $2,788 in 2018. Your lifetime earnings will determine how much you earn; so most people will never earn this amount. You also will only be eligible for that amount if you work until the full retirement age. If you choose to take your Social Security early, you lose some benefits. But this maximum monthly payment is also increasing, from $1420 a month to $1470 a month.
- The payroll tax cap will be increased—Currently, Social Security has a 12.4% payroll tax on any income up to $128,400. Anything above that is not taxed. Starting in 2019, that cap will be increased to $132,900, meaning those who make more money will be paying in more to the Social Security program.
If you are dependent on Social Security, then changes can be scary. Although some changes are coming in 2019, they are not going to be massive overhauls or amendments, but they ensure that many people will be bringing home a little more in the new year.