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 the 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:
Check out the big changes
However, SS is also a dynamic program. It is the trend that SSA
(Social Security Administration) puts effects in the ‘Fact Sheet’ in every
October of the year. This ‘Fact Sheet’ gives the 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:
1.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’s 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% that 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.
2.SS’s full retirement age upsurges, once more
Since the SS came into effect in 1935, it has been only for the 10th a 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 workers.
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, 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 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.
3.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,
maximum taxable earnings cap for thirty-five years. Based on the SSA, it
considers your 35 greatest earning, 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 one $1800 per year for lifespan
upper-income earners throughout the retirement period.
4.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 subsequent year as the
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.
5.Disability Category will enjoy a hike in their income
Social security was only designed to help retries 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 the
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 incomes from social security. For blind individuals, SSDI recipients
get the 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.
6.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 social security benefits before reaching the
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
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.
Note: -
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
into your payout, which you will get monthly after you reach your full retirement
age.
7.Need to work harder to qualify for SSB
The social security program is not just for the 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.
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 the 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 means 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 the fraudulent calls and
phishing schemes. You can prevent this by keeping your information highly
secured. Never reveal your personal info or select any malicious lings or open
any attachment 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 from3rd quarter of the
previous year 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-W 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
which 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 and are available to the majority of the beneficiaries, which you will receive through the mu social security message center if you have created your account by november22, 2019.
Note: - 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 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.
