Key Takeaways:

  • Social Security benefits increased by 1.6% in 2020, providing a modest boost to monthly retirement income.
  • The 6.7% increase in Medicare Part B premiums reduced the practical impact of the Social Security cost-of-living adjustment for many beneficiaries.
  • Social Security’s 2020 changes also included higher earnings limits, a $137,700 taxable wage base, and a maximum benefit of $3,011 for someone retiring at full retirement age.

The Secure Act has dominated recent headlines; however, the Social Security Administration has released the changes for 2020 and they are just as impactful. Below is a quick overview of what to expect for this year.

  • You are receiving a raise! Social Security checks are increasing by 1.6% this year. Sure there have been larger increases, but every extra dollar helps offset inflation.
  • Unfortunately, the increase will have a modest impact on your lifestyle due to the 6.7% increase in the Medicare Part B premium. At first glance, you might assume a hold-harmless situation exists. However, the larger Medicare increase is applied to a smaller amount than the social security increase; therefore, the hold-harmless situation isn’t likely to apply to many people.
  • The cost-of-living adjustment raised the earnings threshold to $18,240 for those filing prior to full retirement age and $48,600 for those applying the year of full retirement.
  • The new taxable wage base is $137,700, up from $132,900.
  • Finally, the maximum social security benefit for a person retiring in 2020 is $3,011, up from $2,861.

Hope you find the above helpful as you plan for retirement.