January 20, 2019
Every year, Social Security benefits are subject to a cost-of-living-adjustment (COLA). In 2019, Social Security benefits will rise 2.8%, the largest COLA increase Social Security recipients have seen in several years. Here, the Social Security attorneys at Disability Associates discuss updates to the Social Security COLA and how this will impact Social Security recipients.
Largest COLA Increase Social Security Recipients Have Seen in Years
Social Security recipients should expect to see a 2.8% increase in their Social Security benefits in 2019, the largest COLA increase in seven years. For the average Social Security recipient, this COLA increase will raise monthly benefits by $39, or roughly $468 a year.
The cost-of-living-adjustment (COLA) is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. The CPI-W figure for the third quarter of the previous year is used as the baseline number, while the average reading during the third quarter of the current year serves as the comparison. If the cost of goods and services measured by the CPI-W has risen from the previous year to the current year, the percentage increase, rounding to the nearest 0.1%, is passed along to Social Security recipients. Should prices fall from the previous year to the current year, the COLA is not increased and simply remains at the current level. So, while COLA adjustments may cause Social Security benefits to rise, it can not cause them to decrease.
Taxable Wage Limit to Rise in 2019 as Well
In order to offset the Social Security benefits increase, the maximum amount of workers’ wages that will be subject to Social Security taxes will also rise. In 2018, the maximum taxable wage for Social Security was $128,400, and in 2019, it will increase to $132,900.
Limitations of the Annual Social Security COLA Increase
Senior citizen and retiree organizations, such as the Senior Citizen League, have advocated for an alteration to the way Social Security COLA is measured and determined. Social Security and Medicare policy analyst at The Senior Citizens League, Mary Johnson, claims that using the CPI-W as the baseline figure does not accurately measure the effects that rising costs of healthcare services and prescription drugs have on retirees. The CPI-W estimates healthcare services and prescription drugs to be seven percent of the average household budget, but for seniors and retirees, this expense is often 14-15% of their household budget. To account for this discrepancy, Johnson recommends using the Consumer Price Index for the Elderly, or CPI-E, which would, “modestly increase the COLAs people would receive.”
Speak to a Social Security Attorney to Learn More About Your Social Security Benefits
Social Security is an important income source for millions of Americans, and it is important for Social Security recipients, both present and future, to stay aware of changes to Social Security benefits. To learn more about your eligibility for the array of Social Security benefits available, contact the Social Security attorneys at Disability Associates today.