Good news for millions of Social Security beneficiaries in 2019 (and it's not COLA) – Motley's Fool

The Social Security Administration (SSA) has recently released its annual list of changes induced by inflation. There is a change that should please the social security beneficiaries who are still working.

If you contribute to social security but you have not yet reached the retirement age, your benefits may be withheld if your earnings exceed a certain threshold. This is known as the Social Security Income Test and, for 2019, beginning creditors of Social Security can earn a lot more money without affecting their benefits.

The social security income test

As I mentioned, the amount of money you can earn while working while simultaneously contributing to Social Security is limited if you have not reached the retirement age. For the purposes of the social security income test, the beneficiaries are divided into three groups:

• If you reach the age of retirement after For the calendar year in question, your benefits are reduced by $ 1 for each $ 2 of earnings exceeding this year's threshold.
• If you reach the age of retirement while During the calendar year, your benefits are reduced by $ 1 for every $ 3 of earnings above the threshold, but only for the months preceding your month of birth.
• If you have already reached the retirement age, the earnings criterion does not apply to you. You can collect all of your social security benefits, regardless of your earned income.

It should also be noted that "reduced" benefits are retained and not lost. I will address this issue later, but I will simply realize that the earnings test does not necessarily lead to a loss of benefits.

The 2019 limits increase

For 2019, the limits of the social security income test increase significantly. Social Security beneficiaries who will not reach retirement age for 2019 can earn $ 50 more per month than in 2018 before benefits are withheld, and those who will reach the end of the year. Retirement age in 2019 will earn $ 130 more per month than the previous limit.

Data source: Social Security Administration.

What could it mean for you

For example, suppose you claimed social security at age 62 and you turn 64 in 2019. As calculated by the SSA, you are entitled to a social security benefit of $ 1,300 per month. Although you receive social security, you still work part-time and earn $ 24,000 a year or $ 2,000 a month.

Based on the 2018 earnings test limits, $ 290 of your benefits would be withheld each month, so you will receive only $ 1,010 per month from Social Security. However, based on the 2019 threshold, $ 265 of your benefits would be withheld, so your social security checks would be $ 25 higher per month. This represents an additional annual income of $ 300 due to the higher earnings test threshold.

If your benefits are retained, they are not necessarily lost

To be perfectly clear, if one of your benefits is withheld because your earnings exceed the earnings control threshold, these benefits are not necessarily lost. On the contrary, they will be used to permanently increase your benefit once you reach the retirement age. Of course, there is no way to know for sure if you will live long enough for balance to balance. This could result in an overall reduction in benefits for many beneficiaries.