2020 Financial Update for Seniors

Did you know you can sell all or a portion of a life insurance policy, even term insurance?

(3 Minute Read)

For many seniors, financial security is a primary focus in the retirement years. By paying attention to savings, income stream, and investments, older Americans have been able to remain confident and stable even during trying economic times. In fact, a study found that the Baby Boomer generation is perhaps the most financially stable demographic, with nearly 70% of responders being confident in their savings, even while that sense of security dropped among younger individuals.

But in order to stay secure, it’s important to stay in the loop of any changes to social security and retirement plans. Let’s take some time to review the following changes to contribution limits and social security regulations to make sure your finances are secure.

Changes to Social Security in 2020 

The income from social security gives retirees a steady income for daily expenses. Beginning January of 2020, beneficiaries drawing on social security will see a 1.6% increase, meaning a total income of  around $24 per hour for an average retired worker. This is the annual Cost of Living Adjustment.

Additionally, the qualifying age for full retirement will see a modest increase. Full retirement is the status when an individual is eligible for 100% of their social security earnings. In 2020, the full retirement age is 66 years and 8 months or older. This qualifying age will define the rule until 2022, when the required age will top out at 67 years old.

Though it may seem strange for the full retirement age to increase ever so slowly, it’s to take into account the tendency for Americans to work longer into their older age.

Retirement Plan Updates in 2020

Employer-sponsored 401(k) plans are important sources of savings and wealth for anyone entering, exiting, or living in the workforce. By matching employee contributions, employers can help their team members grow and secure their financial futures. For those using 401(k) plans, the maximum allowed contribution increased from $19,000 to $19,500. This may seem small, but can mean significant additional savings year after year. For those who are 50 or older, the IRS also allows “catch-up” contributions, meaning additional contributions for those who haven’t been saving or contributing to their 401(k) enough. In 2020, the catch-up contributions allowed will increase from $6000 to $6500.

Another form of saving for retirement is an Individual Retirement Account (IRA), which operates very similarly to 401(k) plans. Just like employer-sponsored plans, participants can contribute earnings to the fund that remain tax free unless deducted early. Individuals are allowed to contribute up to $6,000 among all of their IRAs, with an additional $1,000 in catch-up contributions in 2020.

Whether you’re still saving for your retirement or trying to make the best with what you have during your golden years, it’s vital to understand where that money comes from and what regulations cover it. With an understanding of what changes are here in 2020, you can go out and make this year the best one yet.

Did you know you can sell all or a portion of a life insurance policy, even term insurance? Selling an unwanted life insurance policy is no different than selling your car, home or any other valuable asset that will create immediate cash. Contact us today to learn more.

Leo LaGrotte
Life Settlement Advisors
llagrotte@lsa-llc.com
1-888-849-0887

Leave a Reply

Your email address will not be published. Required fields are marked *