About 70 Million Americans Will Receive 1.3% Social Security Benefits Increase
It continues to get harder and harder to make ends meet – especially for those who depend on monthly Social Security and Supplemental Security Income, which is why it is welcome news that the Social Security Administration (SSA) will increase these benefits by 1.3 percent in 2021. According to the SSA, this change is set to impact the livelihoods of around 70 million Americans, the number of which will only continue to increase as more people reach retirement age.
The Social Security Administration has released a Fact Sheet outlining the 2021 Social Security Changes. Click the button below to view it.
Beginning Jan. 1, 2021, more than 64 million Social Security beneficiaries will see the 1.3 percent cost-of-living (COLA) adjustment.
According to a report by the American Society of Pension Professionals & Actuaries (ASPPA), “based on the increase in average wages, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $142,800.” The ASPPA goes on to report that the earnings limit for those who are younger than what is considered “full retirement age” and collecting Social Security benefits will increase to $18,960. That means that $1 in benefits will be withheld for each $2 earned over the $18,960 earnings limit for these younger Social Security recipients. This changes in the year that an individual will meet their “full retirement age.” In that single year, for those who have not quite reached the magic “full retirement age,” the SSA has stated that $1 in benefits will be deducted from benefits for each $3 earned over $48,600 until the exact month of them meeting their full retirement age threshold. Once that month is reached (and thereafter), there is no benefits reduction for earnings while collecting Social Security benefits.
The age at which you decide to begin claiming Social Security benefits can have a huge impact on your available resources, as seen in the scenarios above. To meet your specific goals, consider speaking to a later life planning specialist regarding a Social Security claiming strategy. Working together, you will gain a better understanding of what your finances will look like during retirement and can discuss ways to help you maximize your retirement benefits before it’s too late.
By Darlene Finzer, CPA, CSA, QKA, principal and director of later life planning services