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Spring 2021  Volume 14, Number 1        
 

Social Security Adjustments for 2021

The Social Security Administration (SSA) made two decisions regarding earning limits and cost of living increases that positively affect monthly benefits.

Earnings Limits Adjusted

Individuals who work part or full time and are receiving Social Security benefits before reaching their full retirement age (FRA), are subject to the retirement earnings test. If they make more than the annual limit, they will receive less in monthly benefits.

In 2020, the limit was $18,240 per year and $48,600 per year for those nearing and reaching their FRA. The SSA increased the minimum for 2021, so if a worker doesn’t reach FRA any time this year, they may now earn up to $18,960 without having their benefits reduced. If they earn more than that amount, their payments will be reduced by $1 for every $2 they earn over the annual limit.

If the worker reaches their FRA in 2021, their earnings have a different limit — $50,520. For every $3 they earn over that, their benefits will be reduced by $1.

The reduction is not permanent. The SSA will recalculate each retiree’s benefit amount once they reach their FRA, and then they’ll start receiving larger checks to compensate for the amount withheld. After they reach their FRA, benefits will not be reduced, regardless of income.

Cost of Living Increase

The SSA's cost of living adjustment for 2021 is 1.3 percent for Social Security and Supplemental Security Income benefits, which assist low-income individuals who are disabled but who haven’t worked enough to qualify for Social Security Disability Insurance.

The Social Security Act ties the annual cost-of-living adjustment to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.

The SSA also increased the maximum amount of earnings subject to the Social Security tax from $137,700 to $142,800.

 

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In this issue:

This Just In...

Congress Takes the Surprise Out of Surprise Billings

Pros and Cons of Having Two Health Insurance Policies

The Increased Importance of Life Insurance During the Pandemic

Social Security Adjustments for 2021

 


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