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You are here: Home / Social Security 2020-2021

Social Security 2020-2021

2021 Social Security saw a 1.3% cost-of-living increase for the nearly 70 million Social Security and Supplemental Security Income (SSI) beneficiaries. For an average retiree who receives monthly social security benefits, that adds up to an additional $20 a month.

See our COLA increase watch for more on the COLA and 2021 social security increase. Will the Coronavirus have an impact?

#BREAKING! Approximately 70 million Americans will get a 1.3% increase in monthly #SocialSecurity benefits and #SSI payments in 2021. Check our blog later this morning for more information: https://t.co/42WeesNNHV #COLA #2021COLA pic.twitter.com/BpK20EC2av

— Social Security (@SocialSecurity) October 13, 2020

“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.” ~ SSA statement

2020 Social Security saw a 1.6% cost-of-living increase for the nearly 69 million Social Security and Supplemental Security Income (SSI) beneficiaries. For an average retiree who receives monthly social security benefits of $1,460, that adds up to an additional $23.40 a month.

Social Security

2021 Social Security and SSDI Effective & Payment Dates:

  • Social Security benefits are effective beginning with December 2020 benefits, which are payable in January 2020.
  • Federal SSI payment levels will begin on December 31, 2020.

To calculate the 2021 COLA (Cost-of-Living Adjustments) increase, if any, the average of the indices of July, August, and September 2020 are compared with the 2019 3rd quarter average. The end result is the percentage by which Social Security benefits are adjusted. This is referred to as the Cost of Living Adjustment (COLA).


2021 Social Security Changes

The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $142,800 from $137,700, a 3.70% increase.

The earnings limit for workers who are younger than “full” retirement age (see Full Retirement Age Chart) will increase to $18,960. (The SSA deducts $1 from benefits for each $2 earned over $18,960.)

The earnings limit for people reaching their “full” retirement age in 2021 will increase to $50,520. (The SSA deducts $1 from benefits for each $3 earned over $50,520 until the month the worker turns “full” retirement age.)

 
2020
2021
Social Security Disability Thresholds
Substantial Gainful Activity (SGA)
Non-Blind$1,260/mo.$1,310/mo.
Blind$2,110/mo.$2,190/mo.
Trial Work Period (TWP)$ 910/mo.$ 940/mo.
Maximum Social Security Benefit: Worker Retiring at Full Retirement Age
$3,011/mo.$3,148/mo.
SSI Federal Payment Standard
Individual$ 783/mo.$ 794/mo.
Couple$1,175/mo.$1,191/mo.
SSI Resource Limits
Individual$2,000$2,000
Couple$3,000$3,000
SSI Student Exclusion
Monthly limit$1,900$1,930
Annual limit$7,670$7,770
Estimated Average Monthly Social Security Benefits Payable in January 2021
Before 1.3% COLA
After 1.3% COLA
All Retired Workers$1,523$1,543
Aged Couple, Both Receiving Benefits$2,563$2,596
Widowed Mother and Two Children$2,962$3,001
Aged Widow(er) Alone$1,434$1,453
Disabled Worker, Spouse and One or More Children$2,195$2,224
All Disabled Workers$1,261$1,277

Source: SSA.gov


How Social Security is Calculated

Social Security benefits are based on lifetime earnings and are adjusted or “indexed” to actual earnings to account for changes in average wages since the year the earnings were received. Then, Social Security calculates the average indexed monthly earnings during the 35 years in which the most was earned. They apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount.” This is how much would be received at your full retirement age — 65 or older, depending on the date of birth.

How Are Social Security Increases Calculated?

To ensure the value of money at retirement keeps up with the rate of inflation, the SSA ties its adjustment for Social Security benefits to the wage earners’ Consumer Price Index (CPI-W). The increase is known as a Cost-of-Living Adjustment (COLA) and it calculates the change in the CPI-W for urban wage earners and clerical workers from the third quarter average of the previous year to the third quarter average for the current year


CPI-W Measurement
2019 2020
July 250.236 252.636
August 250.112 253.597
September 250.251 254.004
Third quarter total 750.599 754.999
Average (rounded to the nearest 0.001) 250.200 253.412
Inflation According to the CPI-W 1.6% 1.3%

Third quarter 2019 was used for the three month average comparison as the law dictates that the SSA use the same three months of “the last year in which COLA became effective.”


History of COLA (cost-of-adjustments) since 1975
Year COLA Year COLA Year COLA
2021 1.30% 2005 2.70% 1989 4.00%
2020 1.60% 2004 2.10% 1988 4.20%
2019 2.80% 2003 1.40% 1987 1.30%
2018 2.00% 2002 2.60% 1986 3.10%
2017 0.30% 2001 3.50% 1985 3.50%
2016 0.00% 2000 2.50% 1984 3.50%
2015 1.70% 1999 1.30% 1983 N/A
2014 1.50% 1998 2.10% 1982 7.40%
2013 1.70% 1997 2.90% 1981 11.20%
2012 3.60% 1996 2.60% 1980 14.30%
2011 0.00% 1995 2.80% 1979 9.90%
2010 0.00% 1994 2.60% 1978 6.50%
2009 5.80% 1993 3.00% 1977 5.90%
2008 2.30% 1992 3.70% 1976 6.40%
2007 3.30% 1991 5.40% 1975 8.00%
2006 4.10% 1990 4.70%

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