Every day, thousands of baby boomers are reaching their retirement age. A report revealed the U.S. population age 65 or older has increased by at least 50 million people in the last ten years.1 With the growth of the retirement population, it has forced the government to redefine Social Security. Here are the major changes coming to the program in 2020:2
- Beneficiaries will receive a “raise.” The cost-of-living adjustment (COLA) for 2020 will increase benefits by 1.6%, which is about an additional $24 for the average retired worker and nearly $20 for the average disabled worker per month.
- Full retirement age will increase. Those who turn 62 in 2020 will still be eligible to claim reduced Social Security benefits; however, they’ll have to wait until age 66 and 8 months to claim their full retirement age benefit amount. And for those born in 1960 or later, the full retirement age increases to age 67.
- More benefits will be taxed. The Social Security wage base will be increased to $137,700 from $132,900 (a 3.6% increase). This means if you make more than $137,700 in both 2019 and 2020, then your Social Security payroll tax will rise to bring it to a maximum of $8,537.40 withheld.
Social Security plays an important part in many Americans’ retirement income. It’s best to be prepared and understand how any changes will affect your retirement strategy. Got questions? Contact us and we'll help you navigate through the changes to optimize your benefits.
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This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results. Death benefit payouts are based upon the claims paying ability of the issuing insurance company. The firm providing this document is not affiliated with the Social Security Administration or any other government entity.
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[1] https://acl.gov/sites/default/files/Aging%20and%20Disability%20in%20America/2017OlderAmericansProfile.pdf
[2] https://www.forbes.com/sites/ashleaebeling/2019/10/10/social-security-wage-base-will-increase-36-while-benefits-will-rise-16-in-2020/#37487818b75a