Receiving Social Security Benefits?  You’re due for a raise!

October 22, 2018  |  

Receiving Social Security Benefits? You’re due for a raise!

Key Takeaways

  • For 2019, Social Security benefits will increase 2.8 percent.
  • This increase will boost the average monthly benefit by $39 to $1,461.
  • The maximum monthly benefit will increase by $73 to $2,861.

The Social Security Administration announced recently that 63 million beneficiaries will receive a 2.8 percent increase in benefits in 2019. This benefit is the largest annual cost-of-living adjustment since 2012 and it impacts retirees, disabled workers, their eligible dependents and surviving family members.

The 2.8 percent increase brings the average Social Security benefit to $1,461 per month, representing a $39 increase.  If you are lucky enough to receive the maximum monthly benefit, your check will increase to $2,861 per month which represents a $73 increase.

Are these increases tempting you to retire early?

Before cashing in your chips and leaving the workforce, consider some important earnings limitations.  The earnings limit for individuals who claim Social Security benefits before reaching their full retirement age (i.e. age 65, 66 or 67 depending on your birth year) will increase to $17,640 in 2019, up from $17,040 this year. Retirees who are under full retirement age for all of 2019 will lose one dollar in benefits for every two dollars earned over $17,640 if they start claiming early. 

The rules are more complex than we have space for in this post. The important point to remember is that if you are under full retirement age, be careful about how much money you earn.  Consult with your tax preparer or your wealth advisor to analyze your situation.  There are many factors impacting when to take Social Security benefits and your wealth advisor can calculate your alternatives.

As reported in Investment News and other sources, Medicare premiums are usually withdrawn directly from Social Security benefits. In past years, the Medicare premium increases were so large that they almost wiped out the annual Social Security cost of living increases. This year, however, experts say that is not expected to happen since the Centers for Medicare and Medicaid Services reported that Medicare Part B premiums will increase by only $1.50 per month in 2019.

Depending on your personal situation, Social Security may play a large role in your retirement planning.  There are many factors to consider when deciding when to start your Social Security including:

  • Whether you’re working or plan to work.
  • Your need for income.
  • Your other sources of income.
  • Your marital status, and if married, the age of your spouse.
  • Your health.
  • Your life expectancy.

Making the wrong decision could amount to hundreds of thousands of dollars in foregone income over the course of your lifetime.  To make the best possible decision, seek the advice of your wealth advisor or tax professional.

Also, there are some great charts, explanations and calculators on the Social Security Administration website.

About Mark Rioboli, CFP®, CFS

Mark A. Rioboli, CFP®, CFS is Director of Wealth Management for Independence Advisors, bringing over 30 years of experience in the wealth management industry. Have a question for Mark? CLICK HERE TO ASK MARK
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