Joel Johnson, CFP® discusses the changes made to Social Security for 2020. Congress makes changes each year, so it’s important to stack on top of these revisions.

Full Retirement Age

Full retirement age has increased to 67.

This was raised from 65 during the Reagan Administration, reason being that there were noticeable improvements in the health of older people and increases in life expectancy.

Cost of Living Adjustment

The Cost of Living is annually adjusted which often increases Social Security benefits. This year, we saw a 1.6% raise, and this number rises with inflation. However, many people will not notice this raise because Medicare premiums will go up.

Years prior, there was no raise because inflation was minimal during the Financial Crisis.

Maximum S.S. Benefits to Increase

Joel talks about how retirees in their 80s receive about $1,000 a week, while someone retiring today would make between $2,700 and $2,800 when they reach full retirement age. “The benefits always increase as long as we wait to take them,” says Joel.

You might want to recalculate your benefits as you are getting ready to retire.

Taxes and Social Security

There is no rule for this; it revolves around other things going on. When the market is doing well, people are forced to take more money out of their retirement accounts, which triggers a higher tax on Social Security.

Develop a long-term tax plan that goes out 10 years into the future, not just this year.