The Social Security Administration (SSA) recently announced a 1.3 percent Cost-of-Living Adjustment (COLA) for all Social Security and Supplemental Security Income (SSI) beneficiaries. This means that nearly 64 million Americans who who receive Social Security benefits (such as disability, retirement, and survivors) will see an increase in their December 2020 benefit, which is payable in January 2021. Those individuals who receive SSI will see their increase beginning on December 31, 2020.
The COLA also applies to anyone receiving benefits as a dependent on a Social Security beneficiary’s record, such as children, spouses, or parents. So long as these individuals are officially listed as dependents on record, they will also receive a 1.3 percent increase to their benefits.
You may already be calculating your anticipated new benefit amount now, but in early December, all individuals receiving Social Security or SSI payments will receive a communication from SSA via postal mail or their my Social Security account (which is free and simple to set up) with their new monthly benefit amount. This will include any increases in taxes, Medicare, or other withholdings.
The 1.3 percent increase is a bit less than last year’s 1.6 percent increase, but COLA amounts can vary significantly year over year due to a variety of economic factors — and there have been several years where no increase is made. Beginning in 1975, Social Security implemented automatic annual COLAs, in accordance with legislation that tied COLAs to the annual increase in the Consumer Price Index (CPI-W). This change ensured that Social Security benefits could retain their value for beneficiaries, rather than being overpowered by inflation. The COLA has ranged from no increase in benefits (2010 and 2011) to as much as 14.3% (1980). Click here to visit SSA’s website and see how the 2021 increase compares to historical COLA increases implemented since 1975.
With the announcement of the COLA, Social Security also announced earnings information, including maximum taxable earnings and SSI resource limits. For more information, please review the Social Security Fact Sheet for 2021. Over the course of the next few weeks, the Centers for Medicare and Medicaid Services will announce any changes or increases in Medicare premiums and deductibles. When this information becomes available, we will share this as well.
If you have questions about this topic, please feel free to reach out to Brown & Brown Absence Services Group or your local Social Security office.
Nothing in this post is intended as advice or a suggestion to elect or not elect to claim benefits of any kind, including Social Security benefits, nor is it intended as financial advice in any way. The decision to claim benefits is a personal one that is contingent upon each individual’s unique circumstances.
