2019 Social Security Increase Largest in 7 Years
For Social Security recipients, the annual cost-of-living adjustments (COLA) the government makes to their benefits is a very big deal. That is because, for many seniors, their monthly Social Security check is the biggest part of their income. In this article, we will look at what the government plans for 2019 Social Security increase.
Why Social Security Income is Vital to Seniors
According to the Social Security Administration, 61% of retired workers count on their Social Security benefits to provide at least half of their monthly income. For unmarried elderly individuals, Social Security benefit payments contribute to as much as 71% of their income.
How Many People are on Social Security?
About 61 million people in the United States collect Social Security benefits each month, which breaks down to about one in five people.
Looking further at the data, about 42 million retired workers receive Social Security benefits, with an average monthly payment of $1,369. In addition, 3 million individuals receive benefits as spouses or children of retired workers, getting an average payment of $712.
Another 8.8 million people receive benefits as disabled workers, receiving an average monthly benefit payment of $1,172 while a total of 3 million children under age 18 receive Social Security.
The table below provides a complete picture on who is on Social Security.
What is Social Security COLA?
Each year, Social Security and Supplemental Security Income (SSI) benefits are adjusted to reflect the increase, if any, in the cost of living.
Congress passed the COLA provision as part of the 1972 Social Security Amendments. Before that legislation, there was no yearly cost of living adjustments to Social Security benefits. Any increases in Social Security benefits had to be enacted by Congress on an ad hoc basis.
The Social Security Administration has been making the COLA adjustment since 1975. It is calculated based on the Consumer Price Index, which is prepared by the Bureau of Labor Statistics (BLS).
The purpose of the cost-of-living adjustment (COLA) is to ensure that the purchasing power of Social Security and SSI benefits is not eroded by inflation.
There is no guarantee that there will be an increase every year. There have been years (like 2016) when Social Security beneficiaries have not seen an increase in their monthly benefits. That is because the government determined that based on the Consumer Price Index, there can be no increase in benefits.
The image below shows COLA information for the past 10 Years. As you can see, in 2010, 2011 and 2016, there were no increases while in 2012, beneficiaries saw a 3.6% increase.
About 2019 Social Security Increase
For 2019, early indications suggest that Social Security beneficiaries will be getting a raise and it will be the largest since 2011.
According to available data, the cost-of-living adjustment should come in between 2.5% and 3%. Let’s say the final COLA for 2019 comes in at 2.8%. With the average monthly Social Security benefit of $1,400, that amounts to an average increase of $39 per month for each recipient.
That will be the largest increase in a while. In 2018, the cost-of-living adjustment increased by 2 percent, In 2017, the cost of living adjustment was just 0.3 percent, while in 2016, it was zero.
Let’s hope the final number for 2019 stays close to 3% as projected.
Impact of Medicare Premium Increase
One of the factors that have frustrated many Social Security recipients in the past has been how much Medicare premiums eat up any increases they get from COLA.
Specifically, monthly premiums for Part B medical coverage, which usually get withheld directly from Social Security benefits typically eat up any cost of living adjustments that are added to beneficiary payments.
This has been a source of irritation for many Social Security recipient.
That’s because it prevents them from seeing the immediate financial benefits of any cost of living adjustments, even though they may be experiencing the negative effects of rising prices.
However, this year, early indications any increase in Medicare Part B monthly premiums would be modest.
Social Security Changes Coming in 2019
As you may have come to expect, there is always a push by Washington D.C. politicians to make changes to the Social Security program. This coming year is no different. The Trump administration’s 2019 budget seeks some major cuts to the Social Security program.
Here are the highlights:
The President’s budget calls for benefit cuts for seniors with disabilities, including:
- Putting a limit to the retroactivity of applications for disability benefits from 12 months to six months (This proposal would cut SSDI benefits by an average of $7,000 for beneficiaries);
- A proposal to deny unemployment compensation payments to certain SSDI beneficiaries; and
- Putting a cap on the amount payable to individuals who receive Supplemental Security Income (SSI) while living with other SSI recipients.
If you have any questions about the 2019 Social Security increase, or want to find out more information about what the final COLA percentage will be and when they will be paid out, tell us in the comments section below.