Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Social Security Changes Coming In 2019

Summary

We review the major changes to Social Security benefits and how you might be effected.

A discussion of why you might want to delay payments to you is included.

For additional articles providing informative and ready-to-use, tradeable advice, join Financial Freedom Insights.

Join Financial Freedom Insights today!

social security

Source: SSA

Its that time of year when the Social Security Administration (SSA) announces its annual updates to Social Security. Below are the key changes that go into effect January 1, 2019 based SSAA's Fact Sheet.

Cost of Living Adjustment

Beneficiaries will see a 2.8% increase in payments due to a cost-of-living adjustment (COLA). This increase is meant to counteract the effect of inflation to ensure you have the same buying power as the year before. While it seems like a 2.8% increase is a lot, this really breaks down to just an increase of $39 per month for the average retiree.

Source: SSA

Online Notices

In December 2018, Social Security COLA notices will be available online to most beneficiaries in the Message Center of their my Social Security. In the past, these notices were only mailed. This is a huge improvement in my opinion.

Maximum taxable earnings will increase to $132,900

In 2019, the maximum taxable income for social security taxes moves from $128,400 to $132,900. Any earnings above that amount are not subject to the tax. The 7.65% tax rate shown below is the combined rate for Social Security and Medicare. The Social Security portion (OASDI) is 6.20% on earnings. The Medicare portion (NYSE:HI) is 1.45% on all earnings.

While the earnings cap increases by 4% ($128,400 to $132, 900), the maximum social security monthly benefit for a worker retiring at full retirement age increases by only 3% ($2,788 vs $2,861).

Source: SSA

Full retirement age continues to increase

As discussed in my latest article, the earliest you can start claiming Social Security retirement benefits is 62. If you claim Social Security benefits at 62, think through the decision carefully ensuring you understand how Social Security benefits work, so you can make the right choice for you and your family.

See the below chart on how the SSA defines ‘full retirement’.

https://static.seekingalpha.com/uploads/2018/11/26/48350476-15432840329454637_origin.png

Source: SSA

To be fair, there is a breakeven that one should review on when to take benefits - the point at which the amount you receive if you claim later equals the amount you would have received if you had started early. Social Security is designed with "actuarial neutrality" built it. Meaning, regardless if you start receiving your benefits earlier or later, you should receive about the same total money over your lifetime. However, since delaying your benefits provides a larger monthly check, most experts advise to delay receiving a payment as long as possible.

Below is a chart showing the break even at a number of typical monthly social security income levels along with if you started to take a check at 62 vs 66 and 70. The break-evens ages are shown in the last column – if you take benefits early, it will generally take you to age 77 to 83 to breakeven – where the extra early payments equal the increased payments for waiting.

Its important to note that you are guaranteed these additional monthly benefits by waiting. While you potentially could get payments starting at 62 and invest in instruments yielding more than you would have by waiting to receive a bigger check later, there is no guarantee of this.

Earnings limits will increase

Many people work while collecting retirement benefits. If you are one of those that works, all or part of your benefits temporarily withheld depending on how much you earn. The main item that changes here is the income limits increase in 2019.

Per the table below, you will be able to earn up to $17,640 in 2019 before you have any reductions to your social security benefits. After that, $1 will be deducted from your payment for every $2 in income that exceeds the limit.

Again, per the table, if you reach full retirement (as defined) in 2019, you will be able to earn $46,920. In addition, for every $3 earned over the 2019 limit, your social security payment will be reduced by $1.

Source: SSA

Social Security disability thresholds increase

Social Security disability payments will increase for 2019. For example, a legally blind person will receive an increase of $70 per month to a maximum of $2,040 a month.

Source: SSA

Why You Should Join Financial Freedom Insights

https://static.seekingalpha.com/uploads/2018/11/12/48350476-15420439317088785.png

Welcome to Financial Freedom Insights where you will gain valuable advice related to investing strategies including stocks, stock options, and bonds. In addition, you will glean key information for those planning for, nearing, or in retirement.

Invest and trade alongside a seasoned investor and learn vital information related to saving and investing as well as asset allocation strategies to help you gain additional returns in your portfolio. Simply: Save more now, invest smarter, and hopefully have more in retirement.

I write on a broad number of industries and stocks searching for those that are undervalued, been beaten down, as well as ones that have strong demand and momentum. My research centers on technical and fundamental analysis leaning more towards a technical angle.

Most importantly, my goals for this service are to:

  1. Help you gain valuable investment and tradeable advice related to investing strategies including stocks and bonds. In some cases, I will also discuss stock option entry and exit points as a way to enhance return and/or mitigate risk.
  2. Provide you with knowledge to help you invest, trade, and learn financial and personal strategies that will make for a more successful and freedom-filled retirement.
  3. Speak in everyday terms so that even the novice investor can understand and gain tradeable ideas and worthy takeaways.

The Value You will Receive

Financial Freedom Insights is a leading, comprehensive investment service for investors like you who want to have access to well-researched and actionable insights on stocks, bonds, and options.

The objective is to help you to be more likely to achieve financial freedom with these services:

  1. Discerning Research & Insightful Analysis : Gain industry knowledge and stock specific backgrounds as the cornerstone of investment recommendations. Discussion of detailed technical and fundamental analysis on companies is provided.
  2. Informative Newsletter: Receive a twice-monthly newsletter summarizing the overall markets and our investment results.
  3. Performance Tracking: Exclusive access to our trade results via the Portfolio Tracker which details our performance for each investment discussed.
  4. Early Access: Obtain early access to stock and option ideas before the larger Seeking Alpha audience.
  5. Actionable Trades: Delivery of timely notification of proposed stock entry and exit points. Receive emails detailing new, time-sensitive trade opportunities.
  6. Understandable Stock Options: As opportunities arise, a discussion of specific stock option trading strategies, as well as entry and exit points will be provided.
  7. On-line Forum: Participate in a chatroom with investors to answer questions and discuss points of view.
  8. Retirement Strategies: If you are like me, I don't plan on retiring in the traditional sense. Rather, I plan to keep an active lifestyle with one that allows me to be free from the financial stresses of life and to focus on the things that really matter - family and community. Discussions in this section are wide and far reaching for all ages including, but not limited to, investing allocations, budgeting, medical expenses, Social Security planning, lifestyle spending choices (e.g housing, travel, etc) as well as how to estimate how much you might need in retirement, etc.

My Background

Learn from a person who has a penchant for investing – my grandfather taught me about investing and trading stock options at 11 years old - and I have built on that knowledge ever since. With over 35 years of investing experience, I am an avid trader, value seeker, and am focused on financial freedom to uncork freedom in life.

I am a Chief Investment Officer as well as a CPA and CMA with experience in public accounting, finance, manufacturing, and oil & gas industries.

As a Seeking Alpha contributor, I have an ever-expanding following and generally write on retirement strategies including investments and in stocks that appear to be undervalued using fundamental analysis and charting to time entry and exit points.

If you’re looking for a better way to invest, Financial Freedom Insights is for you.

Disclaimer: This article is intended to provide educational information to readers and in no way constitutes investment advice. Investing in public securities is speculative and involves risk, including possible loss of principal. The reader of this article must determine whether any investments mentioned in this article are suitable for their portfolio, risk tolerance and accept responsibility for their decisions. Neither information nor any opinion expressed in this article constitutes a solicitation, an offer or a recommendation to buy, sell, or dispose of any investment or to provide any investment advice or service. An opinion in this article can change at any time without notice.