COLA announced on October 10th
The Cost of Living Adjustment for 2020 was announced on Thursday, October 10, 2019 at 1.6%. This adjustment is more than a full percentage point below what was allocated in 2019 at 2.8%. There was no COLA in 2016, in 2017 it was 0.3% and in 2018 it was 2.0%. This announcement is made following the annual release of the Consumer Price Index data for September 2019. Benefits automatically increase if the CPI-W increases in the third quarter of the current year over the previous year. These increases will be available to beneficiaries in January 2020.
This increase would also increase the maximum retirement benefit to $3011 per month for someone who retires at Full Retirement Age in 2020. The payroll tax that funds Social Security applies to the first $132,900 of gross earnings. This new increase would boost the maximum taxable wages to about $137,700 a year. This increase will boost the average benefit by about $32 to $1503 in 2020.
These benefits do not include Delayed Retirement Credits for those that delay claiming their benefits beyond their Full Retirement Age. The Delayed Retirement Credit is 8% per year for every year you postpone benefits up to age 70. And, for those that retire prior to Full Retirement Age, that benefit is permanently reduced for the rest of their life.
Also, this increase affects how much you can earn from a job without jeopardizing your benefits due to Earnings Limitations. In 2019 that amount was $17,460 per year and with the new increase will be $18,240 per year. In the year you turn Full Retirement Age, that amount will increase from $46,920 to $48,600 in 2020.
Please pay close attention to the details included in this article as they could greatly affect your income stream especially if you are electing to draw your benefit and continuing employment. BIG red flag here!
Pillars LLC is located in the Corinth, MS area but services clients in all 50 states. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 42 years. You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699. KNOW before you GO!!