There is a minimal bump up in 2021. The benefit will rise by 1.3 percent, and this equates to five dollars a week for a senior that is receiving the average benefit.
Maximum Penalty-Free Income for Early Benefit Recipients
You become eligible for Social Security when you are 66, 67, or somewhere in between these two ages if you were born between 1955 and 1959. If you would be willing to accept a reduced benefit, you could receive it sooner if you prefer.
It is possible to file for Social Security when you are as young as 62 years of age, but your payout would be reduced by 25 to 30 percent of what it would have been otherwise. This reduction of the benefit is one negative, and there is another one that can take this option off the table.
Most people in the United States are still working when they are 62, and many folks are in the middle of their peak earning years. If you accept an early benefit, you will be penalized if you make more than a certain amount of money each year.
In 2020, the maximum penalty-free income for an early Social Security recipient was $18,240. In 2021, this amount has increased to $18,960 next year.
If you do not accept your full benefit as soon as you can, you earn delayed retirement credits. When you do this, you increase your benefit by eight percent for every year that you delay. You can do this until you are 70 years of age, and it is a good way to maximize your benefit. You should consider it if you feel confident about your life expectancy when you are in your 60s.
Taxable Income Maximum
The portion of the self-employment or payroll taxes that people pay that is earmarked for Social Security is called the old-age, survivors, and disability insurance (OASI) tax. There is a limit on the amount of income that can be taxed for this purpose.
In 2020, the limit was $137,700, and it has increased to $142,800 in 2021.
We Are Here to Help!
Your golden years can be very enriching if you take the right steps in advance to prepare, and inevitably, the twilight years will follow. Long-term care cost can enter the picture, and Medicare does not pay for living assistance.
There are steps that you can take to preserve your legacy, and we can help you develop a plan. If you are ready to make the connection, you can send us a message or give us a call at 630-568-8611 to schedule a consultation.