Baby Boomers! You know, we used to dominate the cultural landscape. Pollsters wanted our opinions, and the Nielsen people wanted to hook their audience measuring machines to our televisions. The canned music in grocery stores was our music. Because we were the Boomer generation, proud products of randy soldiers home from the war. Today, the lettered generations are pushing us aside, and that’s okay. It is the circle of life. But, we are still a force in one field. Every day, 10,000 Baby Boomers (give or take 750) are turning sixty-five and/or retiring. Counting the days until we leave the workforce our new hobby. Don’t tell the 25-year-old boss. For most of us, our Social Security retirement income is what will keep us off our daughter and son-in-law’s couch when we retire. So, how important is it to learn about Social Security changes in 2020 and beyond? Pretty important!
1) Dipping into the Social Security Trust Fund
The excess Social Security trust fund is scheduled to disappear by 2034. If this actually occurs, (and Congress can make sure it does not) it’s estimated that Social Security would pay less than 80% of the promised benefits. President Trump floated the idea of lowering the payroll tax to spur the economy. If he gets his way, the Social Security trust fund will disappear even sooner. This is why turning sixty-five isn’t the target number it once was. Keep reading to find out why.
2) Full Retirement Age Has Increased
This is for those who are not quite Boomer-age. In other words, those folks born in 1960 or later. The full retirement age has already increased to sixty-seven for you. You (kids) will still be able to take Social Security retirement benefits at sixty-two, but with reduced monthly payments.
3) Cost of Living Adjustment
Continued low inflation is a sign of a healthy and balanced economy. Conversely, low inflation numbers mean small cost of living adjustments in monthly Social Security benefits. For 2020, the Social Security COLA will be about 1.8%. That’s isn’t going to change your life, but if you’re dependent on Social Security alone, it’s something. Most Social Security recipients can expect between $25 and $50 extra in the pay envelope.
4) More of Your Social Security Will be Taxed
Yes, Social Security benefits are taxed. How much of a hit will your S.S. take? Well, that depends on your total household income. Just fifty percent is taxable if your individual income is between $25,000 and $34,000. Below that threshold, benefits aren’t taxed by the federal government, but each state taxes S.S. differently, from 0% to the same as regular income. Check your state’s tax code.
You know that is probably an important place at which to stop. As the big day approaches, keep up with the changes in the tax code as they pertain to your situation. If you have done your homework, you will be set for a happy and fulfilled retirement. Oh, and keep reading Gildshire. We’ll keep you up on social security changes you should know.