Every October the Social Security Administration (SSA) announces its annual changes to the Social Security program for the coming year. Here are the Social Security changes that were announced in October 2018 and took effect on Jan. 1, 2019, according to the SSA's annual fact sheet. Keep them in mind when you update your social security information.

Key Takeaways

  • Social Security recipients got a 2.8% raise in 2019, the largest increase since 2012. The raise from 2019 to 2020 will be 1.6%.
  • Maximum earnings subject to the Social Security tax also increased—from $128,400 a year to $132,900. For 2020 that increases to $137,700.
  • Other changes for 2019 included an increase in how much money working Social Security recipients can earn before their benefits are reduced and a slight rise in disability benefits.
  • We also preview 2020 increases.

Beneficiaries Received a 2.8% Increase

For 2019, more than 67 million Social Security recipients saw a 2.8% cost-of-living adjustment (COLA) to their monthly benefits. The adjustment helps benefits keep pace with inflation and is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as calculated by the Bureau of Labor Statistics (BLS). If the CPI-W increases more than 0.1% year over year between the third quarter of the previous year and the third quarter of the current year, Social Security will raise benefits by the same amount.

The 2.8% bump in 2019 represented a 0.8% increase over the previous year’s 2% COLA and the largest increase since 2012 when benefits went up 3.6%. For the average Social Security recipient, however, the 2.8% raise amounts to just $39 per month, as the average monthly payout increased from $1,422 in 2018 to $1,461 in 2019.

Maximum Taxable Earnings Rose to $132,900

In 2018, employees were required to pay a 6.2% Social Security tax (with their employer matching that payment) on income up to $128,400. Any earnings above that amount were not subject to the tax. In 2019, the tax rate remained the same at 6.2%, but the income cap increased to $132,900.

The flip side of this is that as the taxable maximum income increases, so does the maximum amount of earnings used by the SSA to calculate retirement benefits. In 2018, the maximum monthly Social Security benefit for a worker retiring at full retirement age was $2,788. In 2019, the maximum benefit increased by $73 per month to $2,861.

Social Security recipients can get a 76% larger payment each month if they claim benefits at age 70 rather than at age 62.

Full Retirement Age Continues to Rise

The absolute earliest you can start claiming Social Security retirement benefits is age 62. However, claiming before your full (or normal) retirement age will result in the payout being permanently reduced. For those who turned 62 in 2018, the full retirement age is 66 and four months. But for those who turn 62 in 2019, the full retirement age is 66 and six months. Under current law, retirement age is set to increase by two months each year until it hits 67. So, for anyone born in 1960 or later, the full retirement age will be 67, unless the law changes.

If you delay collecting Social Security past your full retirement age you can collect more than your full, or normal, payout. In fact, if you put off claiming until age 70 you will receive a 76% higher annual payout than if you started receiving benefits at 62. After age 70, there is no further incentive for delaying.

Earnings Limits for Social Security Recipients Were Increased

If you work while collecting Social Security benefits, all or part of your benefits may be temporarily withheld, depending on how much you earn. However, those income limits increased slightly in 2019.

Prior to reaching full retirement age, you will be able to earn up to $17,640 in 2019. After that, $1 will be deducted from your payment for every $2 that exceeds the limit. The 2019 annual limit represented a $600 increase over 2018's limit of $17,040.

If you reach full retirement age in 2019, you will be able to earn $46,920, up to $1,560 from 2018's $45,360 annual limit. For every $3 you earn over the 2019 limit, your Social Security benefits will be reduced by $1, but that will only apply to money earned in the months prior to hitting full retirement age.

Once you reach full retirement age, no benefits will be withheld if you continue working. 

Social Security Disability Benefits Increased

About 10 million Americans receive Social Security disability benefits, and those payments also increased slightly in 2019. The legally blind now receive a maximum of $2,040 a month, an increase of $70 a month over 2018. For the non-blind, the maximum benefit increased $40 a month, to $1,220.

You Can View Your COLA Notice Online

For the first time this year, most Social Security recipients will be able to view their COLA notice online in December through their mySocialSecurity account. In the past, that notice was mailed. Notices will still be mailed this year, but in the future, recipients will be able to choose whether to receive their notice online or by mail.

Looking Ahead to 2020

With 2020 approaching, the social security administration has released its updated figures, which include a 1.6% COLA increase:

  • Maximum taxable earnings will rise to $137,700.
  • One work credit: $1,410
  • Maximum benefit at full retirement age: $3,011/mo
  • Full retirement age: 66