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    Home Personal Finance Resources Retirees Get Big Social Security Raise, Small bump in Medicare P




    Home Personal Finance Resources Retirees Get Big Social Security Raise, Small bump in Medicare Payments by Money and Markets.com

    Link:
    https://moneyandmarkets.com/retirees-get-big-social-security-raise-small-boost-in-medicare-payments/?post_ids=6057,5597,6573,5369,5351&utm_source=MAM-Newsletter&utm_medium=Email&utm_campaign=Daily-Article-Traffic

    Retirees Get Big Social Security Raise, Small bump in Medicare Payments

    Posted by
    JT Crowe | Jan 7, 2019 | Personal Finance

    Ringing in a new year also includes changes to how much retirees receive from Social Security, and how much more some people will contribute in payroll taxes toward future benefits.

    Most Medicare recipients will pay a bit more for their premiums than they did last year, and some high-income beneficiaries might be surprised at how much extra they will pay for Medicare this year.

    Per
    InvestmentNews:


    Retirees Get a Big Raise

    Retirees will get a 2.8% increase in their Social Security retirement benefits in 2019, the
    biggest cost-of-living adjustment in seven years. The average retirement benefit will increase by $39, to $1,461 per month; and the average retired couple will receive a $67 raise, to $2,448 per month. The maximum monthly Social Security benefit for lifelong high earners who begin collecting benefits at full retirement age this year will rise by $73 per month, to $2,861.

    Small Boost in Medicare Premiums

    The big news for most retirees is that their Medicare Part B premiums, which pay for doctors visits and outpatient services,
    will increase only slightly in 2019. Most of Medicares 60 million beneficiaries will pay $135.50 per month, up $1.50 from last year. That means the increase in net Social Security benefits after deducting Medicare premiums will be significant in 2019 compared to last year, when a big jump in Medicare premiums wiped out most of the 2018 Social Security COLA.

    Medicare Surcharge Changes

    About 3 million high-income retirees, defined as individuals with modified adjusted gross income exceeding $85,000 and married couples with MAGIs topping $170,000, will pay more for both Medicare Part B and Part D prescription drug plan premiums in 2019. MAGI is AGI plus tax-exempt interest.

    Medicare Part B monthly premiums plus surcharges range from $189.60 to $460.50 per person per month. Although the surcharges are only slightly higher than last year, a new top tier was added in 2019 for very high-income retirees. It applies to individuals with MAGIs over $500,000 and married couples whose MAGI tops $750,000. This years Medicare surcharges are based on 2017 tax returns.

    Higher Taxes for High-Income Workers

    While income taxes may be going down because of the new tax law, payroll taxes are not. The maximum wages subject to payroll or FICA taxes, which fund Social Security benefits, increase by $4,500 this year. Employers and employees each pay 7.65% of the first $132,900 of wages in 2019. That means high-income workers will pay an additional $344.25 in payroll taxes this year. All wages, including those above the $132,900 cap, are subject to the 1.45% portion of the tax that funds Medicare. Plus, individuals with earned income above $200,000 and married couples with earned income topping $250,000 will pay an additional high-income surcharge of 0.9% in Medicare taxes in 2019.

    Early Retirees Can Earn More

    Individuals who claim Social Security benefits before their full retirement age and who continue to work are subject to earnings restrictions that can temporarily reduce or eliminate their benefits. In 2019, retirees younger than 66 can earn up to $17,640 before losing any benefits, $600 more than last year. After that, they would forfeit $1 in benefits for every $2 earned over the limit.

    Those who turn 66 in 2019 can earn up to $46,920 in the months preceding their birthday without jeopardizing any benefits, up $1,560 from last year. They would lose $1 in benefits for every $3 earned over that limit. The earnings cap disappears once they reach full retirement age
    meaning they can earn any amount without forfeiting benefits. Any benefits lost to the earnings cap are restored in the form of higher monthly benefits at full retirement age.



    The Retirement Age is Rising

    The current full retirement age of 66 is increasing for workers born after 1954 and that means the reduction for claiming benefits early is also on the rise. For individuals born in 1957 who become eligible for Social Security when they turn 62 this year, their full retirement age is 66 and 6 months. They can still claim Social Security as early as age 62, but their benefits would be reduced by 27.5%, compared to a 25% reduction for those with a full retirement age of 66 who claim at 62.

    Qualifying Benefits Cost More

    The cost of the credits that a worker needs to qualify for Social Security benefits and Medicare coverage is going up. To be eligible for Social Security and Medicare, you must earn at least 40 Social Security credits with a maximum of four credits per year. In 2019, each credit represents $1,360 in earnings, up $40 from last year. That means, an individual must earn at least $5,440 in 2019 to qualify for the maximum four credits, compared to $5,280 in 2018.

    Social Security Benefits Remain Taxable

    Despite all the talk about lower income taxes as Americans work on their 2018 tax returns in the coming months, Social Security benefits are
    still taxed the same way, based on combined income, which includes a taxpayers adjusted gross income, plus tax-exempt interest and half of their Social Security benefits.


    Individuals whose combined income is between $25,000 and $34,000 pay income taxes on up to half of their benefits. Once their combined income tops $34,000, they pay income taxes on up to 85% of their benefits. Married couples with combined incomes between $32,000 and $44,000 pay taxes on up to 50% of their Social Security benefits. Once their income tops $44,000, they pay taxes on up to 85% of their benefits

  2. #2
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    exactly how your ss is taxed is still very confusing . while 85% gets taxed , determining what gets taxed is very complicated .

    If your combined income exceeds the threshold amounts, an IRS formula is applied to determine how much of your benefits are taxable. The result of these calculations will be that you pay taxes on the lower of:
    • 85% of your Social Security benefits
    • 50% of the benefits plus 85% of the amount of combined income over the second threshold amount
    • 50% of the amount of combined income over the first threshold amount, plus 35% of the amount of combined income over the second threshold amount

  3. #3
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    Quote Originally Posted by mathjak107 View Post
    exactly how your ss is taxed is still very confusing . while 85% gets taxed , determining what gets taxed is very complicated .

    If your combined income exceeds the threshold amounts, an IRS formula is applied to determine how much of your benefits are taxable. The result of these calculations will be that you pay taxes on the lower of:
    • 85% of your Social Security benefits
    • 50% of the benefits plus 85% of the amount of combined income over the second threshold amount
    • 50% of the amount of combined income over the first threshold amount, plus 35% of the amount of combined income over the second threshold amount
    It's a very convoluted and confusing formula, as is the worksheet that the IRS provides. However I found a very simple user friendly calculator online that will give you the correct answer.

    http://www.gnjpc.com/calculators/y2004/socsec.html
    "Some velvet morning when I'm straight"

  4. #4
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    turbotax automatically does it when i do my taxes .easy as pie

  5. #5
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    Quote Originally Posted by mathjak107 View Post
    turbotax automatically does it when i do my taxes .easy as pie
    Well golly gee Captain obvious, thanks for that!

    Freetax does the same for me. As will any tax program do.

    What I use the calculator I linked to for is to estimate how much of my social security will be taxable for the next year so that I can estimate what I want to set my withholding amount to.
    "Some velvet morning when I'm straight"

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