Social Security Changes for 2021 | SSA COLA Raise, SSDI Increase, SSI Increase

Recently the Social Security Administration announced some changes for 2021.

The Cost of Living Adjustment or COLA is one of those changes, and there is some good news and bad news with the COLA.

For those of you that don't know what COLA is, simply it is an increase to the Social Security benefit that is calculated and typically announced in October for the changes that will take effect the following year.

The good news is that the Social Security Administration recently announced a 1.3% COLA for 2021.

That means that your monthly Social Security benefit will go up by 1.3% next year.

The average monthly payout for a retired worker in 2020 is about $1,523 per month.

With the 1.3% increase to COLA, that payout would go up by about $20 per months or an estimated monthly payout of $1,543 per month on average starting in January 2021.

The Cost of Living Adjustment is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers or in short CPI-W.

This CPI-W is calculated by the Bureau of Labor Statistics, which is part of the US Department of Labor.

But simply, the CPI-W determines what workers with modest incomes pay on average for retail products.

Based on the calculated CPI-W the Social Security Administration decided on a 1.3% increase in 2021.

Some experts argue that the CPI-W does not accurately reflect what those on social security are spending their money on.

Instead of gas, electronics, and other products that younger workers spend money on, retirees spend more of their income on food, health care costs and other essential items that have increased in price due to the pandemic.

According to a survey conducted by the Senior Citizens League, and advocacy group, 48% of seniors have gone without essentials such as food or face masks during the COVID-19 crisis.

Over the past 20 years seniors reliant on Social Security have had their COLAs increased by 53%, but over that same time, the products and services purchased by those same seniors have increased by 99.3% or nearly twice as much.

So according to this advocacy group seniors on Social Security are having to live on less money than before.

Along with those on Social Security, there are about 9.7 million people receiving SSDI.

Like those on Social Security, those on SSDI will be receiving a Cost of Living Adjustment of 1.3% for next year as well.

There is an additional change for those on SSDI for 2021, which is an increase to the amount of money you can earn while still continuing to receive SSDI.

For this year 2020, non-blind disabled beneficiaries can earn up to $1,260 per month without losing their benefits, but for 2021, that amount increases by $50 per month to $1,310, or a total of $15,720 per year.

So you can keep SSDI, as long as you make below that amount in 2021.

The disability threshold increase is even greater for blind disabled beneficiaries, where their income threshold will be going up by $80 per month to $2,190 per month without losing their SSDI benefits.

Those on SSI will also receive a 1.3% COLA for 2021 as well.

One of the things that many people are worried about is if their Social Security is going away in 2021 or sometime soon.

The payroll tax cuts that were part of an executive order recently made many people fear that they would lose their Social Security because the payroll tax cuts reduced the amount coming in to Social Security.

However, at this point there isn't anything to worry about, as the Payroll Tax Cuts, were not actually cuts, but only tax deferrals.

So there will not be any gain or loss to the amount sent to Social Security because of those payroll tax holidays.

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0:00 Intro
2:03 Social Security Changes for 2021
COLA for Social Security
5:16 COLA for SSDI
5:37 SSDI Income Threshold Increase
6:45 COLA for SSI
6:57 Is Social Security Going Away?

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