Social Security and retirement rules appear to be altered virtually every year. Every year at the end of the year, retirees and those close to retirement have a plethora of information to consider, ranging from changes in full retirement ages to cost-of-living adjustments. 2024 won’t be any different. There will be plenty of modifications to the rules for seniors, some of which may even surprise them. However, two Social Security regulations will remain unchanged in 2019. Perhaps the most surprising of all could be the absence of any revisions to the rules.
Social Security COLA; Source- Mint
Taxation On Social Security Benefits
To find out how much, if any, of your benefits are taxable income for federal income taxes, Social Security utilizes a measure known as combined income. Your adjusted gross income plus any interest income that is not taxable plus half of your Social Security income is your combined income. You will be responsible for paying taxes on a percentage of your Social Security if your combined income surpasses specific levels. Furthermore, the Social Security taxation laws do not account for inflation, in contrast to regular income tax levels which are normally updated for it.
Social Security Income
As a result, assuming everything else is equal, a growing portion of your Social Security income is subject to taxes each year. Even though you might be able to avoid paying excessive taxes on your Social Security income by carefully preparing, it’s getting more and more difficult to stay below those limits and avoid mistakes. Most people are aware that delaying their Social Security payments past their full retirement age can result in a larger cheque from the government. In fact, for every month you postpone, your monthly check will increase by two-thirds of 1%. That being said, you will continue to not be eligible for any extra retirement credits at the age of 70.
FRA Is Rising
The fact that the full retirement age is rising makes the absence of a regulation modification all the more distressing. The full retirement age for those born in 1957 and 1958 will be 66 years and 6 months or 66 years and 8 months in 2024. Up until 2027, the full retirement age will rise. At that point, people who were born in 1960 will start receiving their full benefits at age 67. The maximum additional benefit you can receive for postponing is lowered because there has been no change to the rules regarding delayed retirement credits.
If they wait until they turn 70 years old, people born between 1943 and 1954 can receive up to 132% of their primary insurance amount; however, people born after 1960 can only receive up to 124% of their primary insurance amount. That does not imply that waiting until you are 70 years old to file for Social Security benefits is a bad idea. Most retirees will prolong postponing benefits to optimize their savings. As long as you are financially sufficient, you should wait until you maximize your monthly benefit unless you have reason to suspect that your life expectancy will be less than usual.
