Social Security plays an important role in most retirement plans, and the Biden administration has proposed significant changes to the program. We will take a look at them, but before we do, let’s look at the existing parameters.
The age of eligibility for Medicare is 65 for everyone, so you might think the Social Security eligibility age is just as straightforward. In fact, it’s a bit more complicated.
For people born between 1943 and 1954, the eligibility age is 66, and it goes up by two months for every birth year. To be clear, this means someone born in 1955 will become eligible two months after their 66th birthday
The two-months-per-year increase reaches 67 in 1960, and it stops there. This is the eligibility age for people born during 1960 and any later year.
You need not apply for Social Security when you reach eligibility age. If you delay, you earn delayed retirement credits that increase your benefit by eight percent for every year you hold off until 70.
If you want to go in the other direction, you can apply for benefits when you are 62, but your benefit will be reduced by 25 percent to 30 percent depending on your birth year.
The amount of your benefit is based on your 35 highest earning years. Traditionally, there has been a limit on the amount of income taxed for Social Security and Medicare purposes.
This year, the maximum taxable income is $142,800 for a single filer. Biden has proposed a Social Security payroll tax on income that exceeds $400,000. At first, people between $142,800 and $400,000 would not pay the extra tax, but the gap would shrink over time.
This proposal would increase the minimum benefit to equal 125 percent of the federal poverty rate. Individuals who have been receiving benefits for at least 20 years would get a five percent increase, and survivors would get a 20 percent boost.
The annual cost of living increases would be based on the Consumer Price Index for the Elderly. This would provide increases more in line with actual expenses that seniors incur.
Proposals are just that; most expert observers feel as though these proposed changes will not receive congressional approval, but some movement could be negotiated over time.
We will monitor the situation and post updated information if anything changes, so you should bookmark this blog and visit us from time to time.
Attend a Free Webinar!
Since you are here, you must be looking for information about estate planning and you are in the right place. You can learn a lot if you explore the resources on this site. And we go the extra mile in another way.
We regularly conduct webinars that cover the most important topics. If you join us, you will come away with an entirely new understanding of the process. Your investment of time will yield dividends.
The dates are posted on our webinar page. When you identify the session you would like to attend, follow the simple instructions to register so we can reserve your spot.
Need Help Now?
If you are ready to take the next step and work with an Oklahoma City estate planning attorney to put a plan in place, we are here to help.
Each situation is unique, and there is no one-size-fits-all estate plan that is right for everyone. When you choose our firm, we will gain an understanding of your situation and your legacy goals and help you devise a plan that ideally suits your needs.
You can set up a consultation appointment if you give us a call at 405-843-6100, or there is a contact form on this site you can fill out if you would rather send us a message.
- Understanding IRA Inheritance Planning: Key Considerations - September 14, 2023
- Irrevocable Trust Decanting Provides Flexibility - September 12, 2023
- Inheritance Planning Solution for a Spendthrift Heir - September 7, 2023