There is no doubt that social security is the most valuable social resource for our country. Of the nearly 64 million beneficiaries receiving a monthly payment, over one-third are exempted from poverty, with more than 15 million of these people retired.
The big changes are focusing on the social security path in 2020.
However, Social Security is also a dynamic program. Each October, the Social Security Administration issues its 'Fact Sheet', which provides updates on everything from what beneficiaries will be paid in the coming year to what is needed to receive compensation.
Below is a summary of the seven biggest changes in Social Security in 2020.
. Beneficiaries receive a modest "raise"
Undoubtedly, the most anticipated event each year is the announcement of a Cost of Living Adjustment (COLA) in the second week of October. COLA is a measure of the inflation faced by social security beneficiaries and represents the "increase" they will receive next year. Of course, this is not really an increase in the true sense of the word, given that COLA was created only to keep up with inflation, not to outpace.
Since 1975, the inflationary attachment of Social Security has been the Consumer Price Index of City Salary Clinic Employees and Employees (CPI-W). To determine the COLA, the average CPI-W reporting from the third quarter of the current year (July to September) is compared to the average CPI-W reporting from the third quarter of the previous year. If the current year is higher than the previous year, then the beneficiaries will receive an increase commensurate with the percentage increase and rounded to the nearest tenth of a percent.
In 2020, beneficiaries will receive 1.6% COLA, which is more or less nominal for the average raise rate received over the last decade. This increase in the monthly payment equates to about $ 24 for the average retired worker and about $ 20 for the average disabled worker.
2. The full retirement age for social security is increasing once more
Only for the tenth time since Social Security was signed in 1935, the full retirement age of the program is projected to increase. The full retirement age (also known as the "normal retirement age" by the Social Security Administration) refers to the age at which a retired employee can collect 100% of their monthly benefits determined from their year of birth.
In 2020, the full retirement age will increase by two months to 66 years and eight months for persons born in 1958. This means that these persons will have to wait until they are at least 66 years and eight months old, if they want 100% of their retired employee a monthly benefit. If they start receiving their payments at any time between the age of 62, the first retirement benefit eligibility age, and 66 years and seven months, they will face a steady reduction in their monthly payments.
Additionally, full retirement age will increase by two months in 2021 and again in 2022, ultimately at most in 2022 to 67 years for anyone born in 1960 or older. late.
3. The wealthy may receive a higher maximum monthly payment
One of the more interesting conclusions about the benefits of retired social security workers is that they are limited to a certain level. For example, in 2019, no retired full-time retirement worker can take home more than $ 2861 a month. This maximum amount of monthly benefits exists because there is a limit to the amount of earned income that may be affected by payroll tax. (I'll say more in the next point.)
To hit Social The maximum monthly security benefit, a worker must have hit or exceeded the above-mentioned maximum taxable income limit for 35 years, given that the Administration Social Security (SSA) takes into account your 35 most inflation-adjusted 35 years of income when calculating your retirement workers' compensation.
In 2020, prosperous retirees could receive much more each month. According to the SSA, the maximum monthly full retirement benefit will increase by $ 150 a month to $ 3011. This is an additional $ 1,800 a year for higher income earners at retirement.
4. Well-working workers will have to open their portfolios a little more widely in 2020.
Conversely, high-income Americans will have to open their portfolios a little more next year.
You see, payroll tax on earned income – it's salaries and wages, but not investment income – generates over 88% of the $ 1 trillion in revenue collected from the program in 2018. This year, all earned revenue between 0 , 01 and $ 132,900 are subject to a 12.4% social security payroll tax. Over the next year, the income limit will increase by $ 4,800 to $ 137,700. The income tax cap increases in line with the National Average Wage Index each year.
Depending on whether well-employed workers are self-employed or hired by someone else (self-employed persons are responsible for all 12.4% payroll tax while employees split their tax obligations with their employer), they will owe up to 595 , $ 20, or $ 297.60, respectively, in 2020.
5. Disability income thresholds jump
Although social security is designed primarily as a financial base for retired workers, it now provides monthly assistance to 8.4 million disabled workers and approximately 1.6 million spouses and children. workers with disabilities.
Each year, the SSA updates the monthly income thresholds at which payments will cease for these individuals. For example, in 2019, a blind social security beneficiary can earn up to $ 1,220 a month without stopping their monthly benefits from the program. For blind Social Security Income Beneficiaries (SSDIs), this threshold was $ 2040.
As we look at changing the calendar in 2020, an SSA update shows that blind SSDI recipients can now earn $ 40 more per month ($ 1,260 per month) without continuing benefits, while blind SSDI beneficiaries can take at home another $ 70 extra per month ($ 2,110 per month) before benefits are suspended.
6. Higher File Retention Thresholds for Higher Files
It's no secret that early files encounter a number of disadvantages, with the biggest being a steady reduction in their monthly payments from the program. But the retirement income test can also be a major thorn in the country of early files that continue to work and generate income.
The retirement income test allows SSA to withhold some or all of your benefits if you started taking payments before your full retirement age are still working and exceeding your defined income thresholds. In 2020, you are allowed to earn $ 18,240 ($ 1,520 per month) without deducting if you do not reach your full retirement age. That's over $ 50 a month from 2019. But if you exceed $ 18,240, SSA can withhold $ 1 in benefits for every $ 2 in earned income above that threshold.
In the meantime, if you reach your full retirement age in 2020, you are allowed to earn $ 48,600 ($ 4,050 per month) before any withholding. That's more than $ 140 a month from 2019. Plus, withholding here is only $ 1 in benefits for every $ 3 of earned income above the threshold.
Note that the retirement income test no longer applies when you reach your full retirement age (no matter when you start receiving your payment) and that any deductible benefits are returned in the form of a higher monthly payment. after you've reached your full retirement age.
7. You will have to work a little harder to qualify for Social Security benefits
Last but not least, understand that Social Security is not just given to you because you were born in the United States. To be eligible for a retirement worker benefit, you will need to earn it through years of work.
To obtain Social Security retirement benefits as well as potential disability and / or survivor insurance, you will need to claim to have earned 40 lifetime loans, of which a maximum of four may be earned annually. These credits are earned based on your income in a given year. In 2019, for example, $ 1,360 earned income equals one lifetime credit, with full-year loans accounting for $ 5,440 earned income ($ 4 X 1,360). Thus, the SSA sets a very reasonable limit for workers who can benefit from compensation.
Next year it will be gradually harder to earn these credits. To qualify for a work loan, you will need $ 1410 in earned income or $ 5 640 a year to maximize your credit.
In just 2.5 months, these big changes need to take effect, so be sure to know.  crazy.insertScript (& # 39; facebook-jssdk & # 39 ;, & # 39; // connect.facebook.net/en_US/sdk.js#xfbml=1&version=v2.3' ;, true);
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