63 million Americans are on the receiving end of Social Security as their major source of income as retirees. The vast majority of retired workers receive a monthly check depending on the level and type of their disability as determined by the SSA. This means every 1 in 6 Americans is dependent on their Social Security income benefits for basic survival.
As important as the Social Security seems, it is not the same as it used to be. Yet, it doesn’t mean that it is not better – in fact, each year, the Social Security Administration adjusts the AIME to regulate their income benefits with the ongoing inflation rates of the fiscal year. Although the increment amounts in the benefits may seem small for some people, it could make a difference of getting by better from that increase in their monthly Social Security check.
- 1. Social Security benefit at full retirement age
In 2019, at full retirement age (67 max), depending on where you were born, the maximum social security benefit topped at $2861/ month for individuals retiring at full retirement age. However, an amazing increase in Social Security benefits at full retirement age will be $3011/month starting January, 2020.
- 2. Substantial Gainful Activity, SGA
“Social Security Administration looks into each persons disabilities differently, which means that you do not necessarily need to have achieved full retirement age to be able to apply for the Social Security Disability Income, SSDI” says a social disability advocate in California.
You could apply for the disability benefits if you meet the minimum disability requirements as listed in the Social Security Administration’s Blue Book of Impairments. With that said, the new Cost-of-Living adjustments made by the SSA will also lead to a positive impact on the disability income benefits for disability due to limitations in meeting the substantial gainful activity, SGA.
While each individual will be examined on their own measure of substantial gainful activity and their disability/impairment, the SSA has a set of criteria to determine the disability income threshold for each of these groups. This is because each state may have its own cost of living due to which the SSA carries out the Cost-of-living adjustments to determine a national average threshold for all disability groups. Three disability groups under SGA would have the following impact:
- - Blind
The monthly income threshold for statutory blind individuals was $2040/month which after the 1.6% income due to COLA adjustments will increase to $2110/month, starting this January. (2020)
- - Non-blind
For non-blind individuals meeting the disability requirements, the disability threshold was $1220/month in 2019 which would be increased to $1260/month, taking in effect from January. (2020)
- - Trial Work Period, TWP
Disabled individuals who could not perform substantial gainful activity previously may want to return to work due to various reasons, such as getting better or recovering from their disability, finding work that they could perform despite their disability or wanting to gain some additional bucks from partial time work jobs such as freelancing. Whatever the reason, the individuals on a monthly disability paycheck from SSDI would need to seek permission from the SSA to do so. With that said, the SSA does have a rule to make sure that these individuals seeking to return to work are not overburdened or without a source of income till they get stable. That is why, the SSA also continues providing a disability income benefit for the trial work period, which was $880/month in 2019 and is incremented to $910/month taking effect from January, 2020.
- 3. Retirement Earnings and SSDI
With the SSDI benefits increments mentioned for the disabled individuals, let us now discuss how the COLA 2020 will affect the maximum taxable earnings for retiring individuals.
The retirement earnings would be taxed depending on whether the retiring individual has reached full retirement age (67 max) or is under full retirement age (63 to 66).
- - Under full retirement age: The income limits for 2019 were $1,470/month (or $17,640/year) which have now increased to $1,520/month (or $18,240/year). Note that for every $2 earned above the income limits you would be withheld $1 in disability benefits.
- - The year an individual reaches full retirement age : The income limits for 2019 were $3,910/month (or $46,920/year) which have now increased to $4,050/month (or $48,600/year). Note that for every $3 earned above the income limits you would be withheld $1 in disability benefits.
- - Beginning the month an individual reaches full retirement age: Once you reach full retirement age (67) none of the above applies i.e., your income would not be subject to any taxes.
No matter the percentage of Cost-of-Living adjustment, COLA increments in 2020, you can still maximize your Social Security Income by taking advantage of the $16,728 retiree bonus that most people tend to ignore or don’t know of. We think we can aide you in maximizing your benefits so you could retire with the peace of mind and the financial leverage that you certainly deserve.