About 67 million Social Security beneficiaries will see a 2.8 percent cost of living adjustment (COLA) starting in January 2019, according to the Social Security Administration.
More than 8 million Supplemental Security Income (SSI) recipients will also see a 2.8 percent increase.
What is a COLA?
A COLA attempts to keep Social Security payments even with inflation. It is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers as determined by the Bureau of Labor Statistics.
COLAs were started in 1972 and then made automatic (dependent on CPI increases) in 1975.
The main drivers for the 2019 increase were rises in energy and shelter prices. Specifically, rent got much more expensive and crude oil increased prices at the pump and for heat.
The 2.8 percent COLA increase in 2019 is the largest since 2012:
- 2018 – 2 percent
- 2017 – 0.3 percent
- 2016 – 0 percent (no increase)
- 2015 – 1.7 percent
- 2014 – 1.5 percent
- 2013 – 1.7 percent
- 2012 – 3.6 percent
Additionally, there was no increase in 2010 and 2011.
Several other changes
The maximum amount someone claiming Social Security at full retirement age will increase by $73 to $2,861 per month.
Social Security assesses a tax of 6.2 percent on earnings up to a maximum limit. This year’s limit will jump from $128,400 to $132,900.
The earnings limit for retired workers younger than 66 will increase to $17,640. For people turning 66 in 2019, the earnings limit will be $46,920. There is no limit on earnings for workers 66 or older for the entire year.
Social Security and SSI beneficiaries are notified of the changes by mail. This year, for the first time, beneficiaries can check on their COLA notice online at socialsecurity.gov.