We recently learned that Social Security beneficiaries are getting a 2.8% cost-of-living adjustment, or COLA, for 2019. However, that's just one of several Social Security changes that were just announced that are tied to rising prices.
For workers, Social Security's maximum taxable earnings are increasing, and more income will be required to earn a Social Security "credit." Beneficiaries who claimed Social Security early and still work will be happy to learn they'll be able to earn more without a benefit reduction in 2019, and for high earners, the maximum possible Social Security benefit is also on the rise.
With all of that in mind, here are the recently released details of these five 2019 Social Security changes.
Beneficiaries are getting a raise
As I mentioned, Social Security beneficiaries are getting a 2.8% COLA starting with their January 2019 benefit payment. The Social Security Administration, or SSA, estimates that the average benefit paid to all retired workers will increase from $1,422 to $1,461 as a result.
It's worth noting that Medicare hasn't yet released its Part B premium changes for 2019 as of this writing, and this will be an important factor in determining the effective COLA. In other words, if your Social Security benefit rises by $50 per month but your Medicare premiums increase by $40, your effective increase is just $10.
Social Security's maximum taxable earnings are rising
Each year, Social Security tax is assessed at a rate of 6.2% for employers and employees, but only on earnings up to a certain threshold. This is known as the Social Security maximum taxable earnings.
For 2019, the maximum taxable earnings will increase by $4,500 -- from $128,400 to $132,900. In other words, if you earn $150,000 in Social Security-covered employment in 2019, $132,900 of those earnings will be subject to Social Security tax, while the other $17,100 will not be.
This increases the maximum Social Security tax an employee could pay from $7,960.80 in 2018 to $8,239.80 in 2019.
One Social Security credit will require more earnings
In order to qualify for Social Security benefits, you'll need to earn 40 Social Security "quarters of coverage," which are also known as Social Security credits.
For 2019, one credit translates to $1,360 in earnings, an increase of $40 from 2018. This may not sound like a lot of money (and it isn't, for most workers), but it's important to note that you can only earn four credits per year.
The earnings test limits are increasing
If you receive Social Security (or plan to) and you haven't reached full retirement age yet, you can now earn more money from a job without affecting your Social Security benefits. For 2019, the Social Security earnings test limits are increasing as follows: