Every new year brings a fresh beginning, this can be just as true now as it ever was.
In 2020, expect increases in savings pretax limits for workers looking toward retirement. If you've already reached retirement age, you'll see a moderate increase in your Social Security benefits payments. However, there will also be increased premiums in Medicare Part B that will work to offset some of that.
Let's take a closer look at more 2020 retirement numbers to see how they'll impact your pocketbook.
In 2020, you can save up to $19,500 in 401(k) plans and as much as $6,000 in your personal IRA account.
If you're age 50 or over, you can up those savings numbers by an additional $6,500 in 401(k) and $1,000 in IRAs.
Of course, it's always smart to take advantage of pre-tax savings up to the maximum allowed.
2020 Social Security Benefits
As a 2020 Social Security benefit recipient, you'll be pleasantly surprised by an increase to each of your checks next year. While the increase will be modest, any increase is better than none.
Unfortunately, the increase you'll receive in 2020 is less than it was in 2019. This year, expect a 1.6% increase compared to the 2.8% hike that retirees received in 2019.
The good news is that this year's boost is still in line with the cost-of-living adjustments over the past ten years, which averaged 1.4%.
The 2020 changes are inflation-based.
Premiums for Medicare
If you're on Medicare, it's time to get ready for increased costs in the coming year. For Part B premiums, your standard monthly costs will increase to $144.60. This is an increase from the $135.50 monthly premium in 2019.
However, the premium you're required to pay depends on how much money you're bringing in.
There is a rule, referred to as the Hold Harmless Provision, that doesn't allow people to experience a reduction in Social Security benefits due to a hike in Medicare premiums. But a good number of retirees will pay additional premiums amounts that are based on income adjustments.
Social Security Full Retirement Age Increase
For individuals born in 1958, 2020 will bring an increase in the full retirement age by two months. This will require an individual to reach the age of 66 years and eight months of age before qualifying. Once you reach this age, you'll qualify for 100% of your Social Security retired worker monthly benefit.
If you decide to take your Social Security payout at any point between age 62 and the new qualifying age, you'll be subject to a permanent reduction in your monthly payout amount.
In addition, expect the qualifying retirement age to increase by another two months in 2021, and yet again in 2022. It will peak at age 67 for people born in 1960 or later.
Don’t forget that 2019 is not over!
You can still participate in funding retirement accounts for 2019 but that window is closing. Contact us for more information on how we can help you.