We have previously mentioned some of the changes you will see to Social Security benefits in 2020, like the 1.6 percent cost-of-living adjustment (COLA), but there are a slew of other changes we will see next year that are worth noting. Below is a description of some of the changes we will see in 2020.
Retirement Age
For some time now the full retirement age has been increasing and will continue to do so until it reaches 67 for all people born 1960 or later. In 2020 the full retirement age will increase by an additional two months to 66 years and eight months for people who were born in 1958. The full retirement age will reach 67 by 2022.
Maximum Benefits Goes Over $3,000
The maximum monthly Social Security retirement benefit will surpass $3,000 for the first time. The maximum monthly benefit amount is for high earners and it is the maximum amount that can be paid no matter how much in taxes a person has paid. The maximum amount in 2020 will be $3,011, which is a monthly increase of $150 and equals an annual increase of $1,800.
Tax Cap Will Be Higher
In 2019 Social Security taxes only applied to the first $132,900 an individual earned. Every dollar earned over that amount was not subjected to Social Security taxes. The cap will increase to $137,700 in 2020, which means higher earners will pay Social Security taxes on an additional $4,800 next year.
Work Credit Requirement
Work credits are needed for Social Security retirement and disability insurance benefits. A worker earns a work credit by earning a certain amount of money each quarter. The amount needed to earn a work credit in 2020 will increase. In 2019 workers earned a credit after they earned at least $1,360 over a three-month quarter and that amount will increase to $1,410 in 2020.
