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What are the Changes to Social Security in 2020 and how will those changes affect me?

These changes affect not only the disabled their spouses and their children but also beneficiaries who receive SSI and retirees.

 
 

What are the Changes to Social Security in 2020?

  1.   New Cost of Living Adjustment (COLA).
  2.   The Social Security monthly disability benefit will increase.
  3.   Substantial Gainful Activity will increase.
  4.   The full retirement age increases.
  5.   The maximum Social Security monthly retirement benefit increases.
  6.   Amount of earnings subject to Social Security payroll tax increases.
  7.   Retirement earnings test tax exempt amount increases.


SS changes 2020

Social Security is changing. These changes affect not only the disabled their spouses and their children but also beneficiaries who receive SSI and retirees.

Changes are coming to Social Security! These changes will take effect in January 2020 and approximately 69 million Americans who receive Social Security benefits will see an increase in their monthly income. These changes affect not only the disabled, their spouses, and their children, but also beneficiaries who receive Social Security Income (SSI), and retirees.


How Will Changes to Social Security in 2020 Affect You?


  1.   New Cost of Living Adjustment (COLA).
  2. Cost of living is measured by the Department of Labor’s Consumer Price Index (CPI-W). To determine COLA, Social Security takes the average CPI-W reading from the third quarter of the current year (July – September) and compares it with the CPI-W of the previous year. When CPI-W goes up, inflation rises and prices for goods and services go up. COLA helps offset these costs. Generally, low inflation is considered a good thing for consumers because it means the cost of goods and services is low, but lower inflation means smaller COLA increases and smaller monthly payouts for Social Security beneficiaries. The cost of living increase in January 2020 is 1.6%, which is lower than last year’s 2.8%, but higher than the average increase for the past ten years (1.4%). This amounts to about $20 per month for the average disabled person.


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  3.   The Social Security monthly disability benefit will increase.
  4. Social Security provides a monthly income to approximately 8.4 million people with disabilities and 1.6 million spouses and children of disabled individuals. The average monthly benefit for a worker, spouse, and one or two children is estimated to be $2,176 (up from $2,141) and the average payment for all disabled workers is estimated to be $1,258 (up from $1,238).


  5.   Substantial Gainful Activity will increase.
  6. Each year the Social Security Administration updates the monthly earnings threshold known as SGA (Substantial Gainful Activity). This is the amount a beneficiary can earn before Social Security benefits will cease. In 2020 a nonblind person may earn $1260 per month (an increase of $40 from 2019) and a blind person may earn $2110 per month (an increase of $70 from 2019).


  7.   The full retirement age increases.
  8. For those born in 1960 or later, normal retirement age (or NRA) is increased to 67. You may still take Social Security retirement payments at age 62, but it would be at a permanently reduced rate. Age 70 is the latest you can delay taking Social Security.


  9.   The maximum Social Security monthly retirement benefit increases.
  10. In 2019, no individual can take home more than $2,861 per month, regardless of pre-retirement income. In 2020 this amount increases $150 per month to $3,011.


  11.   Amount of earnings subject to Social Security payroll tax increases.
  12. All earned income between $0.01 and $137,700 (up from $132,900 in 2019) will be subject to the Social Security payroll tax of 12.4%. An individual who is employed splits this tax with their employer, but self-employed individuals are responsible for the full amount.


  13.   Retirement earnings test tax exempt amount increases.
  14. Social Security withholds benefits if a beneficiary exceeds a certain income level and if they are under full retirement age. For individuals who are under full retirement age, the income limit is $18,240 per year (up from $17,640) and $1.00 in benefits is withheld for every $2.00 in earnings above the limit. For those who reach full retirement age in 2020, the limit is $48,600 per year (up from $46,920) and $1 in benefits will be withheld for every $3 in earnings.


Though not all Social Security beneficiaries are enrolled in Medicare, those individuals who are will also see some changes.

The Part A premium will increase to $458, though many qualify for no charge. Part B premium will increase $9.10 to $144.60, and the annual deductible will increase $13 to $198. Additionally, Supplement Plans F and C will no longer be available to those who became eligible for Medicare on or after January 1, 2020 and Medicare will begin closing the Part D drug plan coverage gap in 2020.


The Social Security Administration posts COLA updates online for disability and retirement beneficiaries who have a my Social Security account. Sign up online to view changes and receive courtesy notifications.


best social security disability lawyer
Disability benefits are an important source of income for those who are unable to work. If you are not able to work due to accident or illness, you may be eligible for Social Security Disability or Long Term Disability benefits. If you have applied for benefits and been denied, contact the attorneys at Bemis, Roach and Reed for a free consultation. Call 512-454-4000 and get help NOW.


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