If you’re approaching retirement in 2019, there are some key changes on the horizon to watch out for. The Social Security system has undergone minor reforms that will come into effect this year, and Medicare changes could also impact your financial bottom line.
The Social Security Cost of Living Adjustment Will Take Effect
If you’re already receiving benefits or will start to receive benefits this year, then you will enjoy a 2.8% increase thanks to the largest cost of living adjustment made in more than half a decade. On average, an individual benefit will increase by $39 per month, while couples will receive an average $67 increase per month. The increase will be particularly important for retirees who rely primarily on Social Security benefits for income.
Medicare Premiums are Up Slightly
Medicare premiums are increasing, but the change won’t be significant enough to offset the gains made in the Social Security cost of living adjustment. The average Medicare beneficiary will pay around $1.50 more per month when compared to 2018.
Medicare Surcharges Will Be Higher for top-tier Income Earners
Medicare surcharges are also increasing, but you’ll only be impacted if you are in the top-tier of income earners. Individual incomes over $85,000 and married couple incomes over $170,000 will now pay higher surcharges for prescription drug premiums. The surcharges have a broad range from roughly $58 per month, up to $325, depending on your situation.
Maximum Benefit Amounts Increase Across the Board
- Claims at 62 years of age are limited to a maximum benefit of $2,209, an increase of $51.
- Claims at 65 years of age are limited to a maximum benefit of $2,757, an increase of $168.
- Claims at 66 years of age are limited to a maximum benefit of $2,861, an increase of $73.
- Claims at 70 years of age are limited to a maximum benefit of $3,770, an increase of $72.
It remains an advantage to claim Social Security later in life, although health, life expectancy, and other retirement savings will be a factor. Understanding the key changes to Social Security benefits will help you to make the right financial decisions as you enter retirement.
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