Six Ways Social Security is Changing in 2019

changes for 2019

Often, the Social Security Administration will make adjustments to their system. These variations are based in tax code, and in allocations of federal resources.

From 2018 to 2019, there are some significant updates you should be aware of. Here are the biggest ones coming our way in January.

#1. Retirement age is increasing

This is a gradual shift. If you wait until “full retirement age” to begin collecting Social Security benefits, then you can collect 100% of those benefits. If you retire earlier, the amount you can collect decreases. The formula for that decrease is based on the number of months ahead of your full retirement age that you are beginning to draw benefits.

So, what is the official full retirement age?

Well, it changes for people born after 1954. It is gradually moving from 66 to 67.

In 2018, that age — also called “normal retirement age” — was 66 1/3. 66 and four months.

For 2019, that age increases to 66 ½, or 66 and six months.

#2. The maximum you can draw is going up

If you earned exceptionally high amounts of income during your career, then you may be bringing in more Social Security benefits in 2019.

That monthly amount, if you are 62 years of age, is moving from $2,158 to $2,209.

If you are 65, it is going from $2,589 to $2,757 (the largest percentage increase, at 6.49%).

If you are 70 or older, that maximum is raising from $3,698 to $3,770.

#3. A considerable increase in the cost-of-living adjustment

In 2018, those Social Security checks got 2% larger, to keep up with inflation.

In 2019, that cost-of-living increase is considerably larger. The monthly checks will increase by 2.8%. This is the largest percentage increase in Social Security benefits in seven years.

#4. An increase in the cost of Medicare Part B

While the cost-of-living increase is bigger than usual, the downside is that Medicare Part B will be getting pricier. The monthly premiums are going up by $1.50. They were $134 last year, but will be $135.50 in 2019.

If you are already paying $134 each month, then the cost-of-living increase will cover that difference.

If you were affected by “hold harmless,” which had prevented Medicare Part B premiums from increasing more than Social Security payments, then you may be paying less than $134 each month. If that is the case, then you may find the entirety of that cost-of-living increase going to cover the Medicare Part B rate jump.

#5. The adjustment for inflation will go up slightly

Your historical income is adjusted for inflation, when calculating the extent of your benefit checks. The Social Security Administration uses the AWI, or national average wage index, to make this calculation. All of this happens automatically, before your checks are cut.

That AWI calculation is going up slightly in 2019, to account for changes in the rate of inflation.

#6. The bend points are going up as well

In 2018, the bend points were at $895 and $5,397.

In 2019, those bend points are increasing to $926 and $5,583.

What are bend points, you ask?

Social Security looks to the 35 years of your highest income, adjusts those years for inflation, and then finds your average monthly income over those 35 years. The bend points are income levels where the Social Security Administration reduces that amount. These bend points are comparable to tax brackets, where proportional amounts are decreased for people earning higher income levels.