The Social Security Administration announced today that, for nearly 70 million people, Social Security and Supplemental Security Income (SSI) benefits will increase by 1.3% in 2021.
The 1.3% increase due to the cost of living adjustment (COLA) will take effect in January 2021 for more than 64 million Social Security beneficiaries. For the 8 million SSI recipients, the increase will take effect on December 31, 2020.
In 2021, retirees ’estimated average monthly benefit will increase by $ 20 per month, from $ 1,523 to $ 1,543, after the 1.3% rise.
Disabled workers ’average monthly benefit is estimated to increase by $ 16 per month, from $ 1,261 to $ 1,277.
The maximum amount of wages taxed for Social Security will be $ 142,800 in 2021, up from $ 137,700 in 2020.
The cost-of-living adjustment (COLA) is calculated using the consumer price index for urban wage earners and clerical workers, or CPI-W, but the problem is that this index focuses on working adults under age 62, so Medicare costs are not represented at all.
The index doesn't account for rising costs seniors face, such as prescription drugs, food, and housing, and this is why the National Committee to Preserve Social Security and Medicare wants the consumer price index for the elderly, or CPI-E to be used instead.
The notice of the new benefit amount is normally mailed to Social Security and SSI beneficiaries in early December, but most people who receive Social Security benefits will be able to view the COLA notice online through their my Social Security accounts, which you can create or access at http://www.socialsecurity.gov/myaccount.
Information about the changes in Medicare coverage for 2021, as soon as it is announced, will appear on es.medicare.gov.