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 decade: 1.52 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 decade: 2.4 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!