Social Security Administration announces modest increase in benefits
On October 13, 2020, the Social Security Administration (SSA) officially announced that Social Security recipients will receive a 1.3 percent cost-of-living adjustment (COLA) for 2021. This adjustment will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2021. Additionally, increased payments to more than 8 million Supplemental Security Income (SSI) beneficiaries will begin on December 31, 2020.1
Many of my clients will likely be disappointed in this year's COLA compared to the 1.6 percent increase beneficiaries saw in 2020, or the 2.8 percent boost in 2019.
How is COLA Calculated?
The Social Security Act ties the annual COLA to the increase in the Consumer Price Index (CPI). In broad terms, the CPI measures the price of consumer goods and how they're trending to evaluate the economy. In short, lower inflation numbers usually equals a modest COLA.2
How Will You Be Notified?
According to the Social Security Administration, Social Security and SSI beneficiaries are usually notified by mail starting in early December about their new benefit amount. However, if you’ve set up your SSA online account, you will also be able to view your COLA notice online through your “My Social Security” account.3
What Are Your Next Steps?
If this increase surprises or concerns you, it's always a good idea to seek guidance from your financial professional about changes to any of your sources of retirement income.
If you are too young to receive Social Security benefits, it is still important for you to monitor your Social Security benefits to ensure that your account has been properly credited with your work history. For information on how to establish your mySocial Security account, click here.
Managing Partner / Account Executive