The Social Security Administration has announced a Cost of Living Adjustment (COLA) of 2.8% in 2019. The increase affects all retirement, disability, and survivor benefits beginning with the December 2018 payments, which are received in January 2019. The COLA also affects “auxiliary benefits” paid to family members (for example spouses, minor children, and disabled adult children) based on the earnings records of a related worker.

This is by far the largest increase since the 3.6% COLA that was declared 2012 and the second largest since 2009. COLA increases are related to inflation in the economy, as measured by the CPI-W: the Consumer Price Index for Urban Wage Earners and Clerical Workers.

The Contribution and Benefit Base, also known as the “wage base,” will increase from $128,400 to $132,900 in 2019. This means that an individual’s earnings up to $132,900 will be subject to Social Security taxes next year. Changes in the wage base are related to increases in the National Average Wage Index.

Changes in other inflation-sensitive numbers for 2019, such as the exempt amount for the Earnings Test, have been announced as well. See https://www.ssa.gov/news/press/factsheets/colafacts2019.pdf