Social Security 2021 COLA Increase Announced

The Social Security Administration just announced a 2021 cost-of-living adjustment (COLA) of 1.3%. From the Social Security Administration's website:

"The 1.3 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2021."

COLAs are implemented automatically based on the annual increase in consumer prices. This has been happening automatically since 1975, when legislation from 1972 took effect. Since that time, Social Security beneficiaries don't have to wait for a special act of Congress to receive a benefit increase.

Other Changes

There are a few other changes. They include:

• The maximum amount of earnings subject to the Social Security tax will increase to $142,800.
• The earnings limit for workers younger than full retirement age (FRA) will increase to $18,960. The Social Security Administration deducts $1 from benefits for each $2 earned over $18,960.
• The earnings limit for people reaching FRA in 2021 will increase to $50,520.  The Social Security Administration deducts $1 from benefits for each $3 earned over $50,520 until the month the worker reaches FRA.

For More information

Your COLA notice will be available online in December 2020 for most beneficiaries. You can find it in the Message Center of your my Social Security account.

Information about Medicare changes for 2021 will be available at www.medicare.gov when the changes are announced. Final 2021 Social Security benefits information cannot be computed until the 2021 Medicare premium amounts are announced. Final 2021 benefit amounts will be mailed to beneficiaries in 2021 and will also be available in your my Social Security account.

For more information about this increase to the Social Security COLA, including historical information about increases over the years, see Cost-of-Living Adjustment (COLA) Information for 2021 on the Social Security Administration's website.

Learn More About Social Security

Social Security is complex, to say the least. To help you learn more about it, Aging Energized has two informative offerings that break everything down into bite-size pieces. Topics covered include when to start collecting benefits, tax considerations, spousal benefits, survivor benefits, the future of Social Security, and a number of other topics.

• The Social Security Basics online course includes 7 video lessons, each with a downloadable handout.
• The Social Security Basics eBook provides information in a downloadable PDF you can read on your computer, tablet, or phone.

You can find the course and eBook on the Aging Energized website. You can download a sample chapter from the eBook, and you can view a sample lesson from the online course.