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Social Security benefits to get a 1.6% boost in 2020



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It's official: Your social security checks will see a modest increase next year.

The Social Security Administration announced Thursday that the cost of living regulation for 2020 will be 1.6%.

This figure is less than what pensioners have received in recent years. In 2019 they hit 2.8%, while in 2018 the increase was 2%.

Still, it is better than zero, as pensioners saw in 2010, 201

1 and 2016.

Adjustment costs for social security have averaged 1.4% over the past decade.

To calculate the change, the Social Security Administration uses the Consumer Price Index for Urban Wage Servants and Salaries, CPI-W, from the Bureau of Labor Statistics.

The 2020 increase is in line with an estimate released last month by the Senior Citizens League, a non-partisan senior group.

Medicare premiums

The next announcement for retirees to look for is the Medicare Part B premiums for next year.

Estimates from Medicare trustees estimate that $ 144.30, up from $ 135.50 in 2019.

If these estimates are correct, individuals receiving the lowest social security payments – $ 550 or less – will be affected of a rule called the team harmless determination, according to two Senior Citizens League.

Premiums for Medicare Part B (which includes medical visits, for example) are usually automatically deducted from Social Security checks.

The harmless attitude prevents the premium increase in Part B from being greater than any Social Security benefit increases. About 70% of recipients are covered, according to the Senior Citizens League.

High-wage earners who do not fall under the harmless provision may see a small excess Medicare premium, says Joe Elsasser, president and founder of Covisum, a provider of Social Security claims software.

Taxes

While social security checks increase 1.6% the tax rates on retirement income will remain the same.

If you earn at least $ 25,000 individually or $ 32,000 as a joint filing couple, your Social Security benefits may be taxed.

One way to plan for that is to increase your voluntary advance with the Social Security Administration.

But a more effective way could be to increase withholding from other sources of income, Elsasser said.

"If they only have insurance, it will be tax-free," Elsasser said. "It is the second income that creates the tax on Social Security benefits."

Purchasing power

Since 2000, social security benefits have lost 33% of purchasing power, according to the Senior Citizens League.

led some advocates to ask for changes in the way COLA is calculated. Democratic proposals in Congress and by presidential candidates, especially Sens. Elizabeth Warren, D-Mass., And Bernie Sanders, I-Vt., Would use the Consumer Price Index for Elderly, or CPI-E, which tracks elderly consumers' spending habits.

Another potential measure, the chained consumer price index for all urban consumers, which measures the average change in consumer goods and services over time, can also be used, Elsasser said.

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Fixing social security can cost less than a cup of coffee [19659003] An important aspect of Social Security's annual COLA is that it affects more than just recipients, said David Freitag, financial planning consultant and social security expert at MassMutual.

For example, the adjustment may affect the amount of individual wages subject to payroll taxes for security. Right now it has been reduced to $ 132,900. It may go up in 2020.

In addition, you must now have at least 40 credits to qualify for retirement benefits. (A credit is how the Social Security Administration measures your eligibility. In 2019, you will receive a credit for each $ 1,360 income. That is a maximum of four credits per year.)

"It's a bigger deal than just a benefit increase," so Friday. "It affects more people than just retirees."


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