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Each year, millions of baby boomers come closer to retirement. If you’re an HR professional or an employer tasked with preparing these long serving, highly valuable individuals for life after work, you’ve got to keep up with the latest Social Security and Medicare trends and changes. And, if you’re an employee, it’s important to have the right information to help you make the best decisions for your long-term financial security, healthcare coverage, and other retirement-related considerations.
Let’s start by examining some high-level changes related to cost-of-living, taxable earnings, full retirement age, and Medicare premiums and deductibles.
On October 10, 2019, the Social Security Administration (SSA) announced all of their 2020 figures. As it turns out, Social Security beneficiaries will receive a 1.6% cost-of-living adjustment (COLA) for monthly benefits payable in 2020 — compared to a larger 2.8% increase in 2019. The COLA is based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). For the average retired worker, the increase is about $24 a month.
Taxable earnings base increase
The Social Security taxable earnings base will increase to $137,700 in 2020 from $132,900 in 2019. There are about 176 million working people paying this combined 7.65% payroll tax, matched by their employers, to support these programs.
Full retirement age limit
In 2020, the full retirement age (FRA, or the age at which a person may first become entitled to full or unreduced retirement benefits) will be 66 for people born January 2, 1954, through January 1, 1955. However, keep in mind that, for Social Security and Medicare purposes, the FRA is established on the day before an individual’s birthday. So, for example, someone born on January 1 is considered to have been born in the previous year.
For more examples, reference the Social Security figures in the table below related to when different individuals reach FRA.
Medicare premiums and deductibles
On November 8, 2019, the Centers for Medicare and Medicaid Services (CMS), an agency under the U.S. Department of Health and Human Services (HHS), released the 2020 Medicare premiums and deductibles. Here are some highlights related to increases:
The following table provides even more in-depth comparisons between 2019 and 2020 Social Security and Medicare figures, including both increases and decreases.
The Social Security and Medicare information above only covers a small percentage of the information in Mercer’s retirement-related products. Now in its 48th edition, the Mercer Guide to Social Security is one of the most popular and trusted Social Security and Medicare products on the market. This booklet gives an easy-to-understand explanation of retirement, survivor, and disability benefits, including over 25 real-life examples and solutions.
Meanwhile, Mercer’s Medicare Booklet explains exactly what you need to know about Medicare in simple, practical terms. For more information or to order either booklet, please visit www.imercer.com/socialsecurity.
This data is designed to help you or your employees properly prepare for a well-deserved retirement. After all, there’s nothing better than peace of mind when it comes to your employees’ financial security and healthcare coverage.