Let’s take a brief look at a few of the other items worth noting:
Higher Payroll Tax Threshold
With the return of the normal payroll tax (which goes toward funding SS & Medicare benefits, Americans will also see an increase in the cap on earnings that are exposed to payroll taxes. Starting this year the cap increased from $110,100 in 2012 to $113,700. People whose earnings exceed this threshold do not pay SS taxes on earnings above the limit.
Higher Earnings Allowed for “Working” Retiree
Many early retirees go back to work part-time or via consulting. If you are claiming Social Security and are between the ages of 62 and 66, this can result in a temporary penalty of $1 for every $2 earned above a certain threshold. The 2013 threshold is $15,120. Those who turn 66 this year will have $1 of benefits for every $3 earned above a $40,080 limit. However, once you turn age 66, the earnings limit no longer applies. Benefits may be recalculated at age 66 to reflect the withheld benefits and continued earnings—that is why this is termed a temporary penalty; one that is “paid back” to the pensioner at full retirement age.
Shift Toward Online Services
More an administrative and cost-saving move, you are now encouraged to start your payments through online request. 2012 online services allowed Americans to access statements online that reflected their full earning history. This is coupled with reduced office hours at your local Social Security office.
As these advising resources change, it is incumbent upon people to get educated on their benefits and how those benefits fit in to their overall retirement income plan. Be sure to join us in the coming months for our Social Security and Medicare Workshop to get some more clarity on this issue.
