Current Social Security beneficiaries are not the only individuals who are affected by changes to the system.
This post has been updated to reflect changes to the program for 2019.
Every year we can count on some changes to the Social Security system that will affect both retirees and workers who are currently paying into the program.
Those who are receiving benefits in 2019 will see a 2.8 percent cost of living increase (COLA). This increase brings the average Social Security benefit to approximately $1,461/month. There was a 2.0 percent COLA increase last year and a 0.3 percent increase in 2017.
Those who are receiving benefits and working prior to full retirement age are limited in the amount of income they can receive before benefits are reduced. The amount of wages one can receive has increased from $17,040/year ($1,420/month) to $17,640/year ($1,470/month). Benefits are reduced by $1 for every $2 above the income threshold.
There is a higher earnings limit for the year in which you reach full retirement age and that amount is now $46,920/year ($3,910/month) as compared to 2018’s limit of $45,360/year ($3,780/month). These benefits are reduced by $1 for every $3 over the income limit, but this only applies to the earnings in the months prior to reaching full retirement age. Benefits are not reduced due to work income once you reach full retirement age.
Current Social Security beneficiaries are not the only individuals who are affected by changes to the system in 2019. Those who are working or self-employed and paying into the Social Security system will see an increase in the amount of wages that are subject to Social Security taxes. 2018 saw a large jump from 2017’s amount of $127,200 to $128,400. Social Security implemented a much more modest increase in 2019, bringing the maximum taxable earnings to $132,900. Dollars that are earned above this amount are not subject to Social Security tax.
Please contact a Brighton Jones advisor for more information on Social Security and changes that may affect you now or in the future.
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Tim Amen, CFP® serves as an advisor at Brighton Jones.
This post was originally published on February 22, 2018.
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