Social Security Benefit Going Up For 2021

Retirement, Income, Tax & Estate Planning.

Social Security Benefit Going Up For 2021

October 15, 2020 Newsletter Social Security 0

Buried in the newspaper this week was news of the annual cost of living adjustment (COLA) from the folks at the Social Security Administration. Benefits will be increasing 1.3% for 2021.

With 18 days to go until the election, who doesn’t wish it was already over? The campaign season seems to keep getting longer. The day a new president is sworn in they begin working on their reelection. It happened with Clinton, Bush, Obama, and Trump. Let’s just hope the election results don’t drag out for weeks and weeks.

Between the election, COVID-19 and the hearings on the Supreme Court nominee, many clients lately have told me how sick they are of all the news and how they’re basically just tuning out until after the election. We’ll see.

So that brings us back to Social Security. Here’s what you need to know:

  • The COLA will be 1.3% for 2021.
  • The average monthly Social Security check will increase to $1,543 in 2021.
  • Benefits for the average couple will increase $33 to $2,596 per month.
  • The maximum benefit for folks retiring now at full retirement age (FRA) of 66 will be $3,148.
  • Those taking Social Security before FRA will be subject to a penalty if their income surpasses $18,960 in 2021.
  • Those taking benefits during the year they will reach FRA can earn up to $50,520 with no penalty on their benefit.
  • Social Security tax will be deducted from your paycheck next year until your earnings hit $142,800.

As for the recent history of COLAs, here’s a rundown of the last few increases. As you can see, 2021 will have the smallest increase since 2017. Obviously, the folks that figure out the consumer price index don’t shop for paper towels, toilet paper other essentials at the supermarket.

Year COLA Increase
2015 1.7%
2016 0.0%
2017 0.3%
2018 2.0%
2019 2.8%
2020 1.6%
2021 1.3%

As for Medicare Part B, they won’t announce any changes to the portion they take out of your Social Security check until December. Right now most folks have a monthly deduction of $145.50.

See, I took you mind off the election, Amy Coney Barrett, and the pandemic for a few minutes.

Enjoy the weekend…