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Social Security benefits will increase by 1.3% for 2021

Approximately 70 million Americans will see a 1.3 percent increase in their Social Security (and Supplemental Security Income) payments effective January 1, 2021.

 

Benefits increase when the cost-of-living rises, as measured by the Department of Labor’s Consumer Price Index (CPI-W).  As prices for goods and services increases, the “Cost of Living Adjustment” (COLA) helps to offset these costs.

 

Average COLA increase over the last decade1.52 percent, with the largest being a 2.8 percent increase that went into effect in 2019.  Historical COLA chart: https://www.ssa.gov/oact/cola/colaseries.html

 

Future COLA forecast for the next decade2.4 percent, based on “intermediate assumptions in the 2020 OASDI Trustees Report:  https://www.ssa.gov/oact/TR/TRassum.html

 

Other key numbers to know for 2021:

  • Maximum Earnings subject to FICA tax: Increasing to $142,800.
  • Retirement Earnings Test Exempt amount*: Increasing to $18,960
    • If turning “Full Retirement Age” in 2021, you can earn up to $50,250, in the months leading up to the month you attain Full Retirement age. From that month forward, you can earn any amount, and not impact your SS benefit!

*Exempt amount is the amount you can EARN in 2021 without triggering reductions to Social Security benefits you are currently collecting.

 

We are awaiting new 2021 numbers for Medicare Part B & D Premium increases, Deductible and other cost sharing increases, and will post these as soon as they are available!