4 Ways Social Security Is Set to Change in 2019

In 2019, Social Security will change in four major ways. You'll be affected whether you are among the more than 43 million retirees who currently receive benefits or you're one of the folks still paying into the program in order to eventually claim benefits. Let's look at the modifications and what you need to know about them.

1. There will be the biggest cost-of-living increase in 7 years.

Current beneficiaries are going to receive the biggest hike in payments since 2012, thanks to a 2.8% cost-of-living adjustment (COLA), which is supposed to tie benefits to inflation, or increases in broader prices. The net result for beneficiaries receiving the average monthly Social Security benefit will be a $39.64 monthly increase, to $1,461. That works out to a $475.68 yearly increase.

The Social Security Administration (SSA) pegs any COLA to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). COLAs for Social Security payments are based on the CPI-W's performance over the past year. The CPI-W hit 246.35 in the third quarter of 2018 versus 239.66 in the third quarter of 2017, a 2.8% difference. The rise was driven by energy prices (heating oil, gasoline) and housing costs (mortgages, rent).

So while the COLA is good news, the average beneficiary will receive Social Security benefits of just $17,532 in 2019.  Most retirees will need retirement savings or to stay in the workforce to some degree, in addition to their Social Security benefits.