Every October, the Collective Security Administration (SSA) announces its annual changes to the Social Security program for the coming year. Here are the Social Care changes that were announced in Oct. 2020 to take effect on Jan. 1, 2021, according to the SSA’s annual fact sheet. Hold them in mind when you update your Social Security information.
- Social Security recipients got a 1.3% cheer up for 2021, compared with the 1.6% hike beneficiaries received in 2020.
- Maximum earnings subject to the Social Security tax also escalated—from $137,700 a year to $142,800.
- Other changes for 2021 included an increase in how much money working Social Fastness recipients can earn before their benefits are reduced and a slight rise in disability benefits.
- Social Security tax measures remain the same for 2021—6.2% on employees and 12.4% on the self-employed.
- It now takes $1,470 to earn a single Social Security upon, up $60 from 2020.
1) Beneficiaries Received a 1.3% Increase
For 2021, nearly 70 million Social Security legatees are seeing a 1.3% cost-of-living adjustment (COLA) to their monthly benefits. The adjustment helps benefits keep determine with inflation and is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as adjusted by the Bureau of Labor Statistics (BLS). If the CPI-W increases more than 0.1% year-over-year between the third quarter of the former year and the third quarter of the current year, Social Security will raise benefits by the same amount.
The 1.3% knock against for 2021 compares with the previous year’s (2020) 1.6% COLA. In 2019, the COLA was 2.8%, the largest increase since 2012. For the mediocre Social Security recipient, the 1.3% raise amounts to just $20 per month on an average monthly payout of $1,543 vs. $1,523 in 2020.
2) Superlative Taxable Earnings Rose to $142,800
In 2020, employees were required to pay a 6.2% Social Security tax (with their gaffer matching that payment) on income of up to $137,700. Any earnings above that amount were not subject to the tax. In 2021, the tax classification remains the same at 6.2% (12.4% for the self-employed), but the income cap has increased to $142,800.
The flip side is that as the taxable maximum income develops, so does the maximum amount of earnings used by the SSA to calculate retirement benefits. In 2020, the maximum monthly Social Deposit benefit for a worker retiring at full retirement age was $3,011. In 2021, the maximum benefit increases by $137 per month to $3,148.
Group Security recipients can receive a 32% larger payment each month if they claim benefits at age 70 less than at their regular full retirement age.
3) Full Retirement Age Continues to Rise
The absolute earliest you can start maintaining Social Security retirement benefits is age 62. However, claiming before your
4) Earnings Limits for Recipients Were Spread
If you work while collecting Social Security benefits, all or part of your benefits may be temporarily
5) Social Security Inability Benefits Increased
Social Security Disability Insurance (SSDI) is an insurance program in which workers can earn coverage for advantages by paying Social Security taxes through their paycheck. The program provides income for those who can no longer develop due to a disability to help replace some of their lost income. Payments increased slightly in 2020 for the nearly 10 million Americans who come into Social Security disability benefits.
Disabled workers will receive, on average, $1,277 per month in 2021, which is up from $1,261 in 2020. Setting aside how, for a disabled worker, a spouse with one or more children, they’ll be paid on average $2,224 per month, which is an burgeon of $29 from 2020.
6) Credit Earning Threshold Goes Up
If you were born in 1929 or later, you must earn at hardly any 40 credits (maximum of four per year) over your working life to qualify for Social Security advances. The amount it takes to earn a single credit goes up slightly each year. For 2021, it will take $1,470 in earnings per assign, up $60 from 2020. The number of credits needed for disability depends on your age when you become disabled.
Looking Up ahead to 2035
According to the most recent Social Security and Medicare Boards of Trustees annual report, both trust funds devise be depleted as of 2035. If these predictions hold, beginning in 2035, beneficiaries will receive about three-quarters (75%) of their book benefit until at least 2093. The report concludes by tasking lawmakers with enacting legislation to address these pecuniary challenges “sooner rather than later.”