Important Social Security Changes Coming in 2021
With the election next month, everything seems “up in the air”. But one thing that is assured – at least for right now – is the Social Security changes already in place to take effect in 2021.
While whichever candidate wins may dramatically affect the future of Social Security benefits for the nation in years to come, the changes for 2021 have already been approved and will be put in place come January 1, 2021. These changes include an increase in monthly benefits, as well as an increase in the tax cap, earnings test limits.
In this article our experienced Social Security Disability lawyers explain the changes to Social Security benefits that will go into effect in 2021.
Cost of Living Increase in Social Security Benefits for 2021
In October The Social Security Administration (SSA) announced that the annual cost-of-living adjustment (COLA) for benefits will be 1.3 percent. That’s a small but important increase for millions of beneficiaries who will see a raise in their monthly payments starting in January. But the benefits increase isn’t the only change coming next year. Here’s a closer look at some of the biggest changes affecting Social Security recipients in 2021.
Average Social Security Retirement Benefit Increase for 2021
- Retired worker: $1,543 ($20 increase in 2021)
- Retired couple: $2,596 ($33 increase in 2021)
- Widow or widower: $1,453 ($19 increase in 2021)
- Widow with two kids: $3,001 ($39 increase in 2021)
Maximum Retirement Benefit Increase at Full retirement Age for 2021
- Retired Worker: $3,148 ($137 increase in 2021)
Average Social Security Disability Benefit Increase for 2021
- Disabled worker: $1,277 ($16 increase in 2021)
- Disabled worker w/ spouse, kids: $2,224 ($29 increase in 2021)
Average SSI Benefit Increase for 2021
- SSI for individual: $794 ($11 increase in 2021)
- SSI for couple: $1,191 ($16 increase in 2021)
The COLA increase is calculated based on the year-over-year rate of inflation. 2021’s small 1.3 percent increase reflects the relatively low rate of inflation over the past year. Still it’s better than year’s past in which prices have fallen year over year and there is no COLA.
Social Security Tax Cap Increases for 2021
The payroll tax that funds the Social Security System is currently 12.4 percent on eligible wages – up to a “cap”. Employees pay 6.2 percent and employers pay the other 6.2 percent (and self-employed workers pay the entire 12.4 percent).
So, the flip side to increased benefits is that the maximum amount of earnings subject to the payroll tax is going up again, as it does every year. In 2020, the maximum amount of taxable earnings was capped at $137,700. That increases in 2021 to $142,800. Earnings over that amount aren’t subject to Social Security taxes next year.
Retired or disabled workers also need to accumulate 40 work credits to become eligible for either Social Security Retirement or Social Security disability benefits. One work credit is equal to three months’ worth of qualifying work in a year. In 2021the amount of earnings required to qualify for a quarter of coverage is going up to $1,470, from $1,410 in 2020.
So, workers can earn up to four work credits in 2021 if you earn at least $5,880. While most people employed full time in the US are well above this limit, those who lost jobs in 2020 due to the pandemic may not accrue as many work credits this past year.
SSI Benefits Increase for 2021
Those who receive a program administered by SSA to help certain individuals For the average individual, that translates to $11 more a month, to $794 from $783. The average couple gets $16 more a month, to $1,191 from $1,175. Supplemental Security Income (SSI) is funded by general tax revenue, and not Social Security payroll taxes. It is a program to assist people with little or no income meet basic living needs. SSI recipients will also receive a 1.3 percent COLA increase in their monthly benefits.
Social Security Disability Lawyers – Orange County
If you or a loved one is unable to work due to a disabling injury, medical condition or disease our skilled and experienced lawyers are here to help you get the maximum Social Security Disability benefits for which you qualify.
The Law Office of Cantrell Green is a group of highly qualified and experienced disability lawyers who have obtained millions of dollars in Social Security Disability benefits for thousands of clients in Long Beach, Orange County and the greater Los Angeles. Our lawyers care about every client, and fight tirelessly to obtain the benefits you deserve.
Free Social Security Disability Lawyer Consultation: 800-964-8047