Social Security has announced a series of changes for 2019 that everyone should be aware of. One of the key changes to the program next year will allow you to earn more without triggering a cut in your social security income. Read on to find out how much more money you can earn in 2019 without putting your social security at risk.
Social security income test: How it works
You can claim social security benefits from the age of 62 If you take your benefits ahead of time, you will receive less than you would have if you had reached retirement age and you are the risk of a reduction in your benefits if your income exceeds an annual limit.
The full retirement age varies, but for those born after 1954 It ranges from 66 years to 67. When you reach the age of 62 in 2019, your full retirement age is 66 years and six months. Earlier, start receiving benefits, and your benefit will increase by five-fifths from 1% per month (6 2/3% per year) for the first 36 months, you early and five twelfths of 1% per month (5%). per year) for every month after 36 months. For example, a person born in or after 1960 has a full retirement age of 67 years. If they claim at the age of 62, their social security income would be cut by 30%.
In addition to the early cut Social Security also has a Salary Limit Test for recipients who have less than full retirement age who can lower their benefit.
The income limit changes each year based on the social security inflation measure, the national average wage index. You could earn up to $ 17,040 by 2018 before you cut your benefits, but by 2019 you can earn $ 17,640 or 3.5% more.
If your income exceeds US $ 17,640 in 2019 and you are under: If you reach full retirement age for the full year, Social Security will reduce your social security income by $ 1 for every $ 2 earned  If you reach full retirement age in 2019, you can earn up to $ 46,920 in prime months to full retirement age. However, if you earn more, Social Security reduces your benefit by $ 1 for every $ 3 earned above the limit.
|Annual Retirement Earnings Test Exempt Amounts|
|Year||Lower Amount Limit||Higher Amount Limits|
|2018||$ 17,040||$ 45,360|
|2019||$ 17,640||$ 46,920|
If your income is above these limits, the reduction will not be proportionate to each monthly Social Security check. Instead, Social Security keeps monthly checks until the reduction amount is met and rounds off a month since it does not pay monthly installments. Once the reduction is achieved, you will receive your normal monthly checks for the remainder of the year.
Let's say Jane is 62 years old, her social security payments are $ 600 a month and she expects to earn $ 25,000 in 2019, or $ 7,360 more than the allowed profit limit. Social Security would hold back $ 3,680 ($ 1 for every $ 2 over the limit) by keeping payments to her by July. In August, Jane would receive her normal $ 600-per-month check by the end of the year.
Earnings cuts are not lost
A common misconception is that cuts in social security income expire because of the results test. That is not true.
As I mentioned earlier, Social Security does not spend monthly monthly benefit checks, which can result in your under-earning in a given year. When this happens, Social Security will refund you the amount you overpaid the following year. For example, in her previous example, Jane would not receive seven months of her monthly social security check, or $ 4,200, which is $ 520 more than her $ 3,680 of her social security income reduction amount. In 2020, she received a check for this $ 520.
It is important that any cuts to your benefit caused by the annual earnings test be re-added to your social security records. This means that cutting the salary limit will increase the amount you will eventually receive upon reaching full retirement age.