Social Security has updates and changes every year. Make sure that you are educated on the changes to Social Security in 2020.
Early retirees will have a higher full retirement age (FRA)
Social Security (SS) bases your amount of benefits with a formula that assumes you will not take out your SS benefits until you reach your FRA. In the case that you claim earlier than the formula assumes, you will receive a smaller amount on your checks. However, for those who are turning 62 in 2020, their FRA will be higher than it was for those who turned 62 in 2019.
For anyone who was born in 1958, the FRA will be 66 years old and eight months. That is two months older than it was before for people who were born in 1957. This means that people turning 62 in 2020 will have a 28.33% reduction from their monthly payments if they claim early.
Workers with high-income to pay more Social Security taxes
For those who earn more than $137,700 annually, they will see their tax withholdings rise by $297.60 during the course of the year. Self-employed workers will see their maximum taxes double to $595.20. However, most workers will not see a change in their taxes.
Payroll taxes are the main source of revenue for Social Security. There will be an additional $4,800 in earnings that are subject to the payroll tax in 2020.
It’ll be harder to qualify for Social Security benefits
In order to qualify for Social Security benefits, you must first earn 40 lifetime work credits. You can earn up to four each year based on your income for the year.
In 2020, the work credit will be harder to earn. In order to qualify for a work credit, you will need $1,410 in monthly earned income. That means that you must earn at least $5,640 to max out your credit for the year.
These changes are less than three months away. Make sure that you are educated on the Social Security changes coming in 2020.