Beginning in 2019, the maximum amount of wages subject to the old age, survivors, and disability insurance (OASDI) tax will increase to $132,900 as announced by the Social Security Administration (SSA). If you’re an employee with wages up to or higher than the maximum in 2019, you will pay $8,239.80 base on the 6.2% OASDI tax rate. The employer will also pay an equal amount. Self-employed individuals, on the other hand, will pay tax at a 12.4% rate up to the limit. For a $7,960.80 maximum amount of OASDI tax, the wage base is going to be $128,400 for 2018.
There is no wage limit for the Medicare hospital insurance tax of 1.45% each for both employees and employers or 2.9% for the self-employed.
Furthermore, another announcement the SSA made is regarding the benefits the recipients of Social Security would get which is a 2.8% cost-of-living adjustment. Additionally, the earnings test for the amount of income that benefits recipients can receive without reducing their benefits each year is $17,640 before full retirement age. The limit taxpayers can earn is $46,920 in the year they reach full retirement age.
1. The increase of full retirement age will continue
Age 62 is the absolute earliest age where you can start claiming your Social Security retirement benefits but if you claim before your full (or normal) retirement age, your payout will be permanently reduced. The full retirement age for those who turn 62 in 2018 is 66 and four months while those who turn 62 in 2019, the full retirement age will increase to 66 and six months. An increase by two months each year is set as full retirement age until it hits 67. This means if you were born in 1960 or later, your full retirement age will be 67.
You are allowed to collect more than your full payout if you delay collecting Social Security past your full retirement age. You may find it better to put off your claim until you reach the age of 70 because you will be a 76% higher annual payout compared to when you start receiving benefits at 62.
2. Increase on Earnings Limits
Depending on how much you earn, all or part of your benefits may be temporarily withheld if you work while collecting Social Security benefits. Those income limits, however, will increase slightly in 2019.
You can earn up to $17,640 in 2019 before reaching full retirement age and a $1 will be deducted from your payment for every $2 that exceeds the limit. The 2019 annual limit starts a $600 increase over 2018's limit of $17,040. You can earn $46,920, which is an increase of $1,560 from the 2018's $45,360 annual limit if you reach full retirement age in 2019. A reduction of $1 of your Social Security benefits will be observed for every $3 earned over the 2019 limit. However, this will only apply to money earned in the months before hitting full retirement age. If you decide to keep your job and work, no benefits will be withheld once you reach the full retirement age.
3. Increase in Social Security Disability Thresholds
The thresholds for about 10 million Americans who qualify for Social Security disability payments are also increasing beginning 2019. In 2018, it was only $70 per month for legally blind but in 2019 the maximum becomes $2,040. The maximum benefit for the non-blind, on the other hand, will increase from $40 a month to $1,220.
4. Take a Look at Your COLA Notice Online
A lot of Social Security recipients can now view their COLA notice online using their mySocialSecurity account in December. This is happening for the first time this year since previously, the notice was mailed. In the future, recipients will have the right to choose whether to receive their notice online or by mail but for this year, notices will still be mailed.
It’s always best to be aware of these changes to ensure that you’re not behind when it comes to the benefits the Social Security provides and will provide in the future.
