Social Security Announces 2021 COLA

The Social Security Administration (SSA) announced that monthly Social Security benefits will increase by 1.3% beginning January 2021.

The SSA also announced changes to other limits.

• The maximum amount of earnings subject to the Social Security tax for all workers will increase from $137,700 to $142,800. (There is no earnings limit on the Medicare tax.)
• The earnings limit for workers who are younger than full retirement age increases from $18,240 to $18,960.  SSA deducts $1 from the benefit for each $2 earned over $18,960.
• The earnings limit for those reaching full retirement age in 2021 increases from $48,600 to $50,250. SSA deducts $1 from benefits for each $3 earned over $50,250 until the month a worker reaches full retirement age. After you reach full retirement age, there is no earnings limit.

The COLA (Cost of Living Adjustment) is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2019 compared to the third quarter of 2020.

For more information, please review the SSA Fact Sheet on 2021 Social Security Changes. If you have any questions, please contact the JRB at 888-JRB-FREE (572-3733) or staff@jrbcj.org.

September 2020