More than 64 million people receive Social Security benefits in the United States each year. With a 1.3 percent increase in Social Security benefits and Supplemental Security Insurance (SSI), the majority of people will be able to collect the increased payments. Along with other potential changes that may occur in 2021, the percent increase would be able to provide increased payments for eligible Social Security and SSI participants.
As explained by the Department of Labor’s Consumer Price Index, federal benefit rates tend to increase when the cost-of-living adjustment (COLA) also increases. The Social Security Administration (SSA) defines COLA as an increase to Social Security and Supplemental Security Income that will help to decrease the effects of inflation. For example, inflation can be described as the increase of prices that consumers may pay for the year. Since 1935, the Social Security Act has created and maintained a specific formula to determine the amount for each COLA, which are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The Bureau of Labor Statistics calculates the amount of CPI-Ws each month to determine the gradual change in prices that are paid by consumers for goods and services. Since the rate of inflation has been relatively low for the past year, COLA is able to provide a positive percentage increase for Social Security benefits and payments. However, it can also be possible that there would be no COLA percentage increases for a year. If the Bureau of Labor Statistics calculates that there is no change in inflation for CPI-Ws, there will not be a COLA for that year.
The new COLA of 1.3 percent will allow Social Security benefits to increase starting with benefits from December 2020, which will become payable in January 2021. SSI will also be affected by the percentage. SSI payments, which are calculated based on income and other financial factors, will be increased. AARP describes the amounts in which people would be able to see changes. It is predicted that an average retired worker could receive a monthly benefit rise by 20 dollars, which will be approximately $1,543. Retired couples can also potentially receive a monthly rise of 33 dollars, and the average disabled worker may be eligible for a monthly $16 increase in their benefits. In addition, the maximum Social Security check for people retiring at their full retirement age will grow by $137. Therefore, individuals will receive $3,148 a month in 2021, compared to $3,011 in 2020.
In 2021, individuals who receive Social Security and SSI benefits will be eligible to see a 1.3 percentage increase in COLA, which will increase their monthly payment amounts. Additional information regarding the 1.3 percent increase in COLA can be found on the SSA’s website at www.ssa.gov. It is important to know the rightful benefits that you are entitled to, including Social Security and SSI benefits and their programs. If you are looking for more information about Social Security or want to learn about potential benefits, please contact and call our office at 800-518-4529.