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4 Social Security Facts You Need to Know for 2019

By Dan Caplinger – Nov 18, 2018 at 8:45AM

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Here's what's happening to the government retirement program next year.

More than 62 million Americans receive Social Security benefits, and the money that they receive every month goes a long way toward supporting their financial needs. With benefits available either for retirees or those who become disabled, Social Security plays a vital role in protecting people from financial hardship.

Every year, Social Security changes somewhat, with many provisions getting updated on an annual basis. Below, you'll learn four important facts about Social Security for 2019, including how much a typical recipient can expect to get and what changes are happening over the coming year.

Two Social Security cards on top of a $100 bill.

Image source: Getty Images.

1. Benefits to go up 2.8%

Social Security provides an annual cost of living increase to its recipients in order to make up for the impact of inflation. The COLA that will take effect at the beginning of 2019 was just announced last month, and the amount was calculated to be 2.8%.

That 2.8% increase will boost what every beneficiary gets from the program. The Social Security Administration (SSA) estimates that the average monthly benefit for retired workers in January 2019 will be $1,461, up $39 because of the COLA calculation. For couples who receive benefits for both members, the average total family benefit of $2,448 per month will be $67 higher than it would have been without the COLA.

In addition, family members will see sizable increases. A widowed parent with two children will see average total family benefits of $2,876, up $79 due to the COLA. A surviving spouse without qualifying children will get an average of $1,386 per month, representing a $38 adjustment due to costs of living.

2. A new full retirement age for some retirees in 2019

Full retirement age is the age at which the SSA will pay you the base amount of benefits calculated from your work record. But full retirement age has been in flux lately, with older ages applying to those who were born later.

If you turn 62 in 2019, then your full retirement age is 66 and six months. That's two months older than it was for those who reached age 62 in 2018. What that means is that those who claim at their earliest possible moment will suffer a 27.5% reduction in their monthly payment compared to what their full retirement benefit would have been if they'd waited. By contrast, if you're older and turn 66 in 2019, you'll be at your full retirement age on your 66th birthday, because that's the age that applies for those born between 1943 and 1954.

3. Social Security's maximum benefit is on the rise

2019 retirees will be eligible for higher payments than those retiring in earlier years. For a worker retiring at full retirement age, the maximum benefit amount will rise $73, to $2,861 per month.

The maximum Social Security payment available under the program depends on exactly when you retire. Those who take benefits at 62 will see their maximum monthly benefit rise just $51, to $2,209. However, those who get benefits at 65 will see a jump to $2,757 per month, up $168 from year-ago levels. Waiting until 70 won't give quite as big a boon, but the maximum will still be $72 higher at $3,770 per month. Moreover, even if you haven't earned enough during your career to get the maximum benefit, high-income individuals still will get almost that amount -- providing a nice supplement to other financial resources.

4. Social Security's maximum payroll tax is going up, too

Social Security gets money from taxes it collects through payroll withholding, and the maximum tax goes up most years. In 2019, earnings of up to $132,900 are subject to tax, up $4,500 from last year's limit. Employees pay 6.2% of their earnings up to that amount, and employers match that with a 6.2% payment of their own. If you're self-employed, then you're on the hook for the full 12.4% total.

If you earn more than that amount, then you can expect to have an additional $279 in taxes withheld from your paychecks this year. For the majority of workers who don't earn that much, there won't be any impact, with the same 6.2% rate applying to whatever they earn.

Be smart with your Social Security

It's important to make the most you can from Social Security, and knowing how the program changes annually can keep you up to date with its provisions. By staying abreast of Social Security's developments, you'll be in the best position possible to take advantage of the program when the time comes.

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