What was the Social Security Increase for 2020, Being the most prosperous program, Social Security has helped thousands of retired workers. 62% of superannuated workers are achieving at least half of their income from the SS benefit. According to the latest reports, it has been seen that there is a current update released on October 10. In actuality, it is the release date for the US BLS (Bureau of Labor Statistics) September Inflation Data that has the last puzzle portion required to calculate SS’s COLA for 2020.
Firstly, you should know about the COLA so that you may understand the effects of the latest update for the coming year. In a general sense, COLA is defined as the ‘increase’ that are received by the beneficiaries from one year to the subsequent inflation they have suffered from. Obviously, it is not an increment in real meaning.
The main thing is that COLA is made to sustain inflation rather than outpacing it. Based on this update for 2020, COLA will be increasing by 1.6 percent. If we see the data of the previous decades, then it has been observed that COLA’s have 1.4% less than half the 3 percent average.
As low COLAs have an accumulative effect with time, SS benefits are about 17.5 percent lower these days than inflation had averaged a more typical 3 percent over the same period. There is a lot to discover when it comes to Social Security’s COLA 2020. Proceed further to avoid missing the latest updates in Social Security COLA:
What was the Social Security Increase for 2020
Check out the big changes
However, SS is also a dynamic program. It is the trend that the SSA (Social Security Administration) puts effects in the ‘Fact Sheet’ every October of the year. This ‘Fact Sheet’ gives recent updates on everything, which also includes what beneficiaries will be disbursed in the upcoming year to what it proceeds to qualify for an SS benefit. We will discuss 7 biggest changes in the SS benefits offered to beneficiaries in 2020, let’s go through them:
A modest ‘raise’ for beneficiaries
There is no doubt in the statement that it is expected to see the update for COLA that releases during the 2nd week of October every year. It is the most anticipated thing to occur. COLA is the extent of the inflation that SS beneficiaries have gone through and shows the ‘raise’ that they will get in the forthcoming year. As mentioned above, it is meant to keep up with the consequences of inflation.
Since 1975, SS’s inflationary tether has been the CPI-W, which is abbreviated as the Consumer Price Index for Urban Wage Earners & Clerical Workers. To conclude, Cost-of-Living-Adjustment, the comparison of the average reading of CPI-W from the 3rd quarter of the recent year (July to September) with the average CPI-W 3rd quarter reading of the past year is done.
If the present year is greater than the past year, then beneficiaries will be going to get a raise, which is proportionate with the increase in percentage and rounded to the nearest 10th of a percent. When it comes to the 2020 update, there is a change in the amount of COLA, which is 1.6% which is less or more par for the course with the average ‘raise’ obtained over the previous decade.
This boost in monthly payment is equal to about $24 for the average retired employee and nearly $20 for the disabled worker according to the average readings.
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SS’s full retirement age upsurges, once more
Since the SS came into effect in 1935, it has been only the 10th time that the full retirement age to qualify for SS benefits is set to boost. The normal retirement age by the SSA is defined as the age at which a retired worker can gather 100% of their monthly benefit, as decided by the birth year of the worker.
When we talk about 2020’s COLA update, the normal retirement age will extend by 2 months to 66 years and 8 months for individuals who have a birth year, of 1958. According to this thing, these people will need to wait until they are no less than 66 years and 8 months if they are willing to get the complete benefit of their retired worker Social Security for a month.
If they start acquiring their payout at any point between the ages of 62, the primary age of eligibility for superannuated worker benefits, and 66 years and 7 months, they will experience a permanent decrease in their payout on a monthly basis.
In addition to that, the normal retirement age will boost by 2 months in 2021 and further in 2022. It is expected to see that there will be a great peak in 2022 at age 67 for any person born in 1960 or later.
The wealthy can achieve a greater maximum monthly disbursement
Another exciting twist about SS benefits for retired workers is that they are covered at a certain level. In the previous year, no retired worker at the normal retirement age could take home more than 2861 dollars for a month. This capon monthly SS benefits occurs due to the fact a cap is in place on the total of earned income that there will be an impact on the payroll tax.
If anyone wants to hit the maximum monthly benefit from Social Security, a worker will necessitate having surpassed or hit those as mentioned above, the maximum taxable earnings cap for thirty-five years. Based on the SSA, it considers your 35 greatest earnings, inflation-adjusted years when you are calculating your benefit of retired workers.
When the next year 2020 will come, retirees who are well-to-do could achieve quite a bit more every month. Social Security Administration has stated that the optimum monthly benefit at normal retirement age will boost by #150 every month to $3011. This amount is the extra $1800 per year for lifespan upper-income earners throughout the retirement period.
Wealthy workers will need to extend their wallets
On the other hand, American people who belong to the upper-income category, they are going to open their wallets a bit more in the subsequent years as a necessity. The payroll tax on received income, which includes salary and wages, but not investment income, produced more than 88 percent of the $1 trillion in profits or revenue gathered by the program in 2018.
Currently, all earned pay between 0.1 dollars and 132900 dollars is subject to SS’s 12.4 percent payroll tax. The subsequent year, the earnings cap will increase by $4800 to $137700. The pays tax cap increases step by step with the National Average Wage Index every year.
It means that wealthy people meaning that those who have earned more enough will get the highest level of social security benefits. But there is one thing that you need to know; you need to find out whether you are self-employed or working under someone else. The reason is that there are some things that may change according to your employment option.
The self-employed persons are accountable for the whole 12.4 percent payroll tax. While on the other hand, employees split their tax responsibility with their employer; these employees will owe up to 595.20 dollars or 297.60 dollars extra, respectively, in the next year, 2020.
For more details about these changes, you can have a word with an expert or directly contact the Social Security Administration. Before claiming any of the Social Security benefits, you should understand all these things if you are a wealthy guy and earn more than the normal salary.
The disability Category will enjoy a hike in their income
Social security was only designed to help retirees only when it was first established, but today there are more than 8.4 million disabled workers who are getting financial help from the disabled social security income. According to a rough estimation, there are 1.6 million spouses and minor children of eligible disabled workers are taking benefits.
Every year there are changes made in the social security which updates regarding the monthly earnings of the people are taking SS benefits. Sometimes monthly income thresholds updates made by the SSA might also cease the income of the individuals.
For example, in the year 2019, a non-blind SS beneficiary could earn up to $1,220 per month without the need to stop their monthly income from social security. For blind individuals, SSDI recipients get a threshold of$2,040.
According to the changes which will take place in 2020, SSA might update earnings of non-blind social security disability income by $40, while completely blind beneficiaries will get a $70 threshold a month before the SS benefits will stop.
Preservation brink for early filers
Willingly or not, if you have filed your social security in advance, you have to face a number of disadvantages. One of the biggest losses that people face when they file for social security benefits before reaching retirement age is the permanent deduction in the amount.
There is one more thing and that is a retirement earning test because it is a major issue for the early filers who continue to work to get a constant income. The retirement earnings test is one thing that allows the social security administration to withhold all or some of your perks if you start taking your benefits early before you reach full retirement age, you are still working and have crossed the set earning threshold.
In 2020, individuals are allowed to generate $18,240 with no withholding in case you do not reach your full retirement age. This is going to be $50 or a month and it started in 2019. On the off chance, if you have passed this amount, ten social security can withhold one dollar in benefit for every two dollars earned income above this brink.
If you reach your full retirement age in 2020, then you will be still allowed to earn $48,600 before any brink is going to take place. This is going to be $140 per month from 2019, including withholding of one dollar benefit for every three dollars earned above-mentioned threshold.
The retirement earnings test will no longer be valid for you if you have already reached your full retirement age, and your withheld benefits will get added to your payout, which you will get monthly after you reach your full retirement age.
Need to work harder to qualify for SSB
The social security program is not just for United States citizens, but it is for all those who are paying taxes. In order to receive the social security benefits, you have to qualify for it first and there are many chances that your application might get rejected. You have to earn working credits; you have to pass the other eligibility criteria as only then you are going to receive your perks.
To guarantee yourself social security retirement benefits, survivor’s benefits and disability benefits and other insurances you need to hold 40-lifetime credits for which you need 4 credits every year. There are reasonable bars set by the social security government and to qualify you will need all the documents and 40 credits.
From 2020 it is going to be a little tough to earn the credits. To qualify, you will need $1,410 or $5,640 for the year to max your credits. These are the updates that will be in action soon, so it is extremely important for you to get updated.
Must Read: Apply For Social Security Benefits Online
Social Security COLA notice
COLA notice is available online for the majority of the beneficiaries, which you can check online using your ‘My social security account.’ This is the most convenient, safe way to receive COLA updates and notices online and you also get to save all the changes for later review.
You can also block the notifications and notices which are available online; you can choose your preferred settings and activate courtesy notifications which mean you will never miss any important COLA notices and updates. These services are free of charge, and your information is totally safe. No reputable organization of federal agency will solicit any beneficiary’s personal data or request any cost or fees for these services.
You must be aware of fraudulent calls and phishing schemes. You can prevent this by keeping your information highly secured. Never reveal your personal info or select any malicious links or open any attachments regarding false information on COLA.
Purpose of COLA
COLA –the cost of living adjustment is designed to make sure that social security purchasing power and supplemental benefits do not get affected by inflation. COLA is totally based on the percentage hike in the consumer price index for the clerical workers and urban wage earners from a quarter of the previous year’s COLA determination to the 3rd quarter of the present year.
If there is no hike in it, then there is going to be no cost of living adjustment. Clerical workers is determined by the Bureau of labor statistics in the department of labor. CPI-W is an official measure decided by the law used by the administration of social security to calculate the cost of living adjustment.
In 1972 COLA was enacted as a part of social security amendments by Congress and the annual cost of living started automatically in 1975. Earlier the hikes were made under special legislation. In the beginning, COLA was started automatically with social security, and the changes were enacted by legislation that ties COLA to the yearly increase in CPI-W. The changes that take place due to inflation do not drain the value of social security benefits.
IMPORTANT POINTS NOT TO BE MISSED
- There are 69 million Americans who are receiving social security benefits, and it is going to increase by 1.6% in 2020 which is COLA.
- The increase is going to begin on December 31, 2019, and the increase will begin with the perk that SS beneficiaries will receive in January 2020.
- The COLA notice is already circulated in the entire month of December 2019. It is also possible that your friends and family have already received the notice. You must wait for a while to receive the notification.
- You can have a look at your COLA notice online which are available to the majority of the beneficiaries, you will receive it through the mu social security message center if you have created your account by November 22, 2019.
If you are going to receive social security benefits, then make sure that you have an active account at my social security to receive all the updates. Not only had social security-related information is updated here, but COLA notices are also available here. You can opt out anytime you want. Make sure that you sign up and make your account to get the text message and email for the next time a COLA notice is going to be generated for the social security beneficiaries.
It is important to make an account because of the updated information, notices and changes can be easily accessed safely and conveniently online. To check out the 2020 COLA updates, you will need my social security account.