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Social Security benefits will increase by 1.3% in January 2021
The Social Security Administration announced a number of changes on Tuesday, October 13, 2020 that will go into effect in January 2021. These changes impact benefits for approximately 70 million Americans and include the following:
- The 2021 Cost-of-Living Adjustment (COLA) for SS benefits will be 1.3%. That’s the smallest COLA since 2017. The COLA that went into effect in 2020 was 1.6%. (Quite a difference from the 14.3% COLA that went into effect in 1981!).
- The estimated average monthly Social Security benefit payable in January 2021 will increase from $1,523 to $1,543 ($240 per year). For a married couple where both are receiving benefits, the average monthly benefit will increase from $2,563 to $2,596 ($396 per year).
- The maximum monthly benefit for a worker retiring at Full Retirement Age (FRA) will increase from $3,011 to $3,148.
- Also taking effect in January is the increased cap on earnings subject to Social Security tax, which will increase from $137,700 to $142,800.
For additional numbers related to Social Security benefits (including income limitations for retirement earnings test amounts, quarter of coverage amount, disability thresholds, etc.), visit the Social Security Administration website here. If you have any questions or concerns, please reach out to our team at SVB Private.
