The Social Security Administration has just announced a pay raise for those who are collecting Social Security payments in 2020. The cost of living adjustment (COLA) brought the payouts up by 1.6% for the more than 63 million Americans who take Social Security benefits starting in January of 2020.
The COLA adjustment is based on the Labor Department’s Consumer Price Index. Those who pay into Social Security on wages will also see the maximum income cap threshold rise to $137,700 from $132,900 for their 7.65% tax (or 15.3% if self-employed).
The Social Security Administration also showed that the average estimated monthly benefit will rise to $1,503 in 2020 from $1,479 in 2019, and the average receipt for an aged couple with both receiving benefits in 2019 of $2,491 will rise to a projected $2,531 per month starting in 2020.
The maximum benefits per month for a worker retiring at full retirement age will rise to $3,011 in 2020 from $2,861 in 2019.
One issue that is static, and dates back to 2013, is that individuals with earned income of more than $200,000 (or $250,000 for married couples filing jointly) will continue to pay an additional 0.9% in Medicare taxes above those maximum thresholds above.
AARP, formerly the American Association of Retired Persons, has noted in its response that Social Security is the largest source of retirement income for most retirees.
24/7 Wall St. has recently released its retirement installment of 10 ways retirees can boost their income and raise cash during retirement. That will create an adjustment for some of these numbers, but one thing is certain here: most retirees are going to have made stronger planning than just relying on Social Security payments if they want to enjoy their golden years.