With 2019 quickly coming to a close, the Social Security Administration has released its complete changes to Social Security.
The most anticipated change each year is the announcement of the next year’s Cost-of-Living (COLA) adjustment. In October, the SSA revealed the 2020 COLA increase will be 1.6%–the same as 2019. This will boost the average monthly benefit for retired workers to $1,503 ($1,479 in 2019) and $2,531 for couples ($2,491 in 2019).
But the COLA isn’t the only thing changing in the new year:
Maximum taxable earnings
Maximum taxable earnings amount refers to the amount of income a worker makes in year that is subject to the 7.65% Social Security payroll tax. This year that amount was $132,900—meaning the first $132,900 each person made this year was taxed. In 2020, that cap will raise to $137,700, bringing more money into the Trust Funds.
Maximum Social Security benefit (at FRA)
Those eligible to receive the maximum possible monthly Social Security benefit (at full retirement age) will receive a modest increase in 2020. The maximum possible benefit payment in 2019 was $2,861 per month. Next year, we’ll see that raise to $3,011 per month.
Retirement earnings test exempt amounts
In 2019, retirement income exceeding $17,640 per year would result in a portion of benefits being withheld. But next year, beneficiaries will be able to earn up to $18,240 per year before their Social Security benefits are affected. Currently, for every two dollars earned in excess of the earnings test exempt amount, one dollar of benefits are withheld.