On an annual basis, the Social Security Adminstration changes a few things that impact benefit payments. The annual cost of living adjustment is one of the most notable, but there are other things that are equally important. In this video I lay out the three most important changes for 2019.
TRANSCRIPT OF VIDEO BELOW
In 2019, there will be a few key changes to social security. I don’t want to cover all of them, but here are the three that I think are the most important to know. The first things that’s changing may be the best thing. Social security benefits are going up next year. Now yes, this happens just about every year, but this is the largest increase since 2012.
To give you a short history, in 2017, social security benefits increased by .3%. That was followed by an increase of 2% in 2018. By 2019, benefits are increasing by 2.8%. Now that doesn’t sound like a big difference, but one of the key differences is that when benefits were increased in 2018, there was a corresponding increase to Medicare premiums that just about wiped it out completely. That is not expected to happen this year.
The next big change is the earnings limit. Now, this is the amount that individuals who are less than full retirement age can earn while they are also drawing a social security benefit. This year it increased to $17,040. Next year it’s increasing to $17,640. So let’s take a pause right here because there are a few numbers you really ought to understand within this earnings limit. I’ll most likely do a video in the future that covers this in more depth, but for now, just know that the earnings limit, if you are under full retirement age, is $17,640. At your full retirement age, there is no limit.
However, there is one small band in there where the income limit changes, and that is in the calendar year you reach your full retirement age. Then the limit is higher. For 2019, that increased limit is $46,920. So for example, if you obtain your full retirement age in July, then you would be subject to this increased limit at the beginning of January of that same year. And if you’re not sure when your full retirement age is, I’m going to link up a video in the comments so you can watch that and figure it out for yourself.
The last notable change is the amount of income that you have to pay social security tax on. Now the total amount of social security tax is 12.4%. Now if you’re self-employed, you get to pay the entire amount, but if you’re a W2 employee, your employer is paying half of that, leaving you with about 6.2%. But that’s only up to a certain limit. In 2017, that limit was on the first $127,000 in wages. In 2018, it was 128,000. For 2019, that amount is going up to $132,900.
Now those are the big changes you need to know, and I’ll continue to put videos on here as we know more about the Medicare increases and some of the other details about these other things that always change. Til then, have a fantastic week.