Social Security in 2020
KnowWhat’s Changing
ARE MORE POWERFUL THAN WE THINK The Opinions of Others If you’re in the appropriate age bracket, Social Security may play a major role in your finances. So, it’s important to know how Social Security will be changing in 2020. Trust Fund Unless Congress takes some drastic actions in the coming months, the current excess trust fund revenue will be depleted by the year 2034. If that happens, Social Security will only be able to pay 79% of the promised benefits from ongoing payroll taxes. You may need to think about what your financial plan would be like with 21% less income. Retirement Age If you haven’t reached retirement yet, this one is important to consider. If you were born after 1959, the full retirement age is now 67 for you. You’ll still be able to start taking some benefits at age 62, but they’ll be at reduced monthly payments. Cost of Living Low inflation means that Social Security benefits will only see a minor cost of living increase. This year, it’s expected to be around 1.6%. It’s not major, but if you’re living off Social Security alone, every penny is important. Let’s say two different people are trying to convince you to buy two different kinds of luxury automobile. One of these people is a mechanical engineer who has spent their entire career building, studying, and testing luxury cars. The other is a random person off the street whom you know nothing about. Whose opinion are you going to respect more? Which car would you choose to buy? The choice to go with the car recommended by the engineer seems logical. And to be honest, they probably know quite a bit about what makes a great luxury car. That being said, when we choose to believe that a perceived expert knows the right choice to make in a given situation, we are actually abiding by a type of social proof. You might have heard the term “social proof” before. However, in case you haven’t, social proof is basically a psychological phenomenon whereby we assume other people are better informed about certain decisions, and we defer to their opinion when we make our own decisions. There are six types of social proof: the expert opinion, the celebrity opinion, the user opinion, the crowd opinion, the friend’s opinion, and the certification opinion.
Maximum Benefits Those near the top of the Social Security income scale in 2019 will see an increase in their maximum payout in 2020. The maximum payout for an individual will be capped at $2,861 per month. That translates to $34,332 per year, so consider how that may impact your finances. Taxes How much your benefits are taxed depends on your household income levels. For example, 50% of your benefits will be taxed if you make between $25,000–$34,000 individually or $32,000–$44,000 for married couples. If you’re above that income bracket, then 85% of your benefits will be taxable.
The luxury car scenario is an example of the expert opinion. You would be more inclined to believe the engineer because they’re an expert in the luxury car industry. That opinion carries some extra meaning. Similarly, we might read user reviews of a specific product online to get a better idea of the best products available, the user opinion. Social proof is at work when customers, who are uncertain about which products and services are superior, turn to other people they believe know better than them. As business owners, we need to understand how powerful client/customer testimonials and referrals are in marketing. Positive reviews show potential customers that other people, like friends or former customers, endorse our products and services. They show we’re good at what we do.
How are you proving to your customers you’re the best at what you do?
2
WWW.TERRYMONROE.COM
800.805.9575
Made with FlippingBook Online newsletter