Every year, the Social Security Administration adjusts the regulations for the Social Security program. These adjustments include various items such as the retirement age, earnings cap and benefit payout. The changes for this upcoming year are summarized below:
Full Retirement Age
Full retirement is the age at which the Social Security Administration will allow you receive 100% of your Social Security benefits. If a taxpayer decides to draw before this age, they will receive reduced monthly payouts. Withdrawals that are elected to begin after the full retirement age and up to age 70 can potentially increase payout up to 132%. The full retirement ages are based on birth year and are applied as follows for 2020:
- 1954 and earlier- age 66
- 1955- age 66, 2 months
- 1956- age 66, 4 months
- 1957- age 66, 6 months
- 1958- age 66, 8 months
- 1959- age 66, 10 months
- 1960 and later- age 67
The Earnings Cap
The earnings cap is the highest amount of income that will be subject to FICA taxes. This cap will be increased to $137,700 in 2020 which is up $4,800 from 2019.
A benefit increase is meant for the payout to keep up with the cost of inflation for the year. The increase for 2020 will be 1.6%, compared to the 2.8% given in 2019 based upon the national average social security check amount. This equates to roughly $24 per month.
Those who start to draw Social Security before full retirement age can have earned income up to $18,240 per year without having to return some or all of their Social Security benefits. In the year they reach full retirement an individual can have earned income up to $48,600, without paying any amount back. If you are planning on drawing from Social Security prior to your full retirement age, it will be important for you to keep these thresholds in mind to avoid having to return payments received.
Benefits are also available to workers who are disabled along with their spouses and children. For non-blind disability recipients, there is a $40 monthly increase to $1,260. Blind disability recipients will have an increase of $70 more every month to $2,110.
When it comes to retirement, it is important to have goals. Social Security can be a great tool to assist you when it comes to maximizing your wealth and achieving those goals. If you have questions about the changes to Social Security or how they could apply to you, contact your Barnes Dennig advisor, call us at 513-241-8313 or click here to contact us at no charge. We look forward to assisting you soon.