4 important changes that will affect social security in 2020
If you are one of the nearly 69 million Americans who receive social security or supplementary income benefits, you will notice a slight change in this month’s monthly check, writes USA Today.
This month, more than 63 million beneficiaries will receive a 1,6% adjustment in the cost of living.
The average monthly allowance for all senior citizens this month will increase from 1479 to 1503 dollars. The average monthly allowance for couples receiving benefits will increase from $ 2491 to $ 2531.
This is one of many changes that may happen in 2020.
Here are some others:
Social Security Tax Income
The maximum amount of income taxed by social security tax will increase from $ 132 in 900 to $ 2019 in 137. It should be noted that this increase affects only 700 million of the 2020 million workers covered by the social security system. But this increase, according to David Freytag, financial planning consultant at MassMutual, may come as a surprise to 11,8% of employees who will have to pay about $ 171 more to the social security system in 7 than in 2020.
On the subject: 20 Facts about US Social Security
As a reference: employees must pay 6,2% of their earnings up to the maximum taxable amount to the social security system. And they must pay 1,45% of all their Medicare income. Your employer compares, up to the taxable maximum, with these percentages in total of 15,3%. At the same time, self-employed workers must pay 15,3% of their income in the form of federal payroll taxes, also known as FICA, the Federal Insurance Contribution Tax.
The only good news about this increase is that you and your employer will not have to pay Social Security tax on income in excess of the taxable maximum amount.
How work affects your benefits
If you work, receive social security benefits, and you are under the full retirement age, your earnings may reduce the amount of the benefit. (Full retirement age is the age at which you first qualify for full or incomplete pension provision through the social security system).
For example, in 2020, the Social Security Administration will deduct $ 1 for every $ 2 earned over $ 18.
On the subject: What taxes do you pay from your salary in the USA
However, the earnings limit for people who turn 2020 years old in 66 will increase to $ 48, and the Social Security Service (SSA) will withhold $ 600 from benefits for every $ 1 earned over $ 3 until the employee not turn 48 years old. Beginning in 600, two months are added for each year of birth, until the full retirement age reaches 66 years for people born in 1955 and later.
One positive point: there are no restrictions on earnings for employees who are FRA (future interest rate agreement) or older throughout the year.
Social Security and Taxes
According to SSA, just over half of Americans (56%) pay taxes on social security benefits. And that percentage is likely to increase, given that social security income tax thresholds are not legally adjusted for inflation, according to Joseph Stenken, product consultant for advanced markets at Ameritas.
For an individual whose total income is between $ 25 and $ 000, up to 34% of his social security benefits may be taxed. For incomes over $ 000, up to 50% of benefits may be taxed.
And for those who file a joint return and whose combined income is between $ 32 and $ 000, up to 44% of benefits may be taxed. For income over $ 000, up to 50% of benefits may be taxed.
The bipartisan resignation bill that President Donald Trump signed late last year will also affect current and future beneficiaries in at least several ways.
First, those who will turn 70 and a half years after 2019, they may delay receiving the required minimum distributions or RMD from their retirement accounts until they are 72 years old. RMD is usually the minimum amount that a pension account holder must withdraw annually.
And it could be a mixed bag for beneficiaries who are not spouses. Such a beneficiary is a living person for whom life expectancy can be calculated, and he / she is not the spouse of the owner of the retirement account.
Under the old law, designated non-spouse beneficiaries can receive payments during their lifetime. But now for many owners of retirement accounts who will die in 2020 and beyond, the beneficiaries will have only 10 years to clear the account.
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