The Social Security Administration (SSA) recently announced that recipients of Social Security benefits will get a 2.8% cost-of-living adjustment (COLA) in monthly benefits beginning in January 2019.  This increase is the largest since 2012 and one of the largest increases in the last 20 years.

For those receiving Social Security benefits and still working prior to full retirement age, the earning limits were also announced.  The earnings limit affects the amount of income you can earn before Social Security benefits are reduced.  If your earnings exceed a certain level during the year, Social Security withholds a portion of your benefits.  There are two categorizes for this test; recipients who are under full retirement age, and recipients who are reaching full retirement age during the current year.  Recipients receiving income before full retirement age will be able to earn up to $1,470 a month in 2019.  If you have wages greater than this amount, SSA will reduce your benefits $1 for every $2 earned above this amount.  For people reaching full retirement age in 2019, the earnings limit is a little more generous.  If you turn 66 in 2019, you can earn up to $3,910 a month before your birthday without losing any benefits.  Again, should you earn more than this amount, SSA will reduce your benefits $1 for every $3 earned above this amount.

Lastly, another key part of the announcement was more of everyone’s income will be subject to the Social Security tax in 2019.  For 2019, the maximum amount of wages subject to Social Security tax (OASDI) will increase to $132,900 up from $128,400 in 2018.  As such, an employee with wages up to or above the maximum amount of $132,900 in 2019 would pay $8,239.80 in tax.  This amount is up from maximum amount of Social Security tax of $7,960.80 in 2018.

The rules affecting Social Security are complex and can be very confusing.  You’ve paid into Social Security your entire working life.  So, let us help you maximize your benefits when it’s time to retire.  If you have a question about Social Security or would like help analyzing your Social Security options, contact your Investor Solutions financial advisor at (800) 508-8500 to help you get started.