The Social Security Administration (SSA) announced Oct. 13 that the monthly Social Security and Supplemental Security Income (SSI) benefits will increase 1.3% in 2021. The change will affect approximately 70 million Americans. This announcement provides an early signal regarding COLA adjustments on contribution and benefit limits, and is consistent with some recent projections.
The 1.3% cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2021. Increased payments to more than 8 million SSI beneficiaries will begin on Dec. 31, 2020.
Based on the increase in average wages, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $142,800.
The earnings limit for workers who are younger than “full” retirement age will increase to $18,960. SSA notes that $1 in benefits will be withheld for each $2 earned over $18,960.
The earnings limit for people reaching full retirement age in 2021 will increase to $50,520. Here, SSA says that $1 will be deducted from benefits for each $3 earned over $48,600 until the month the worker reaches full retirement age. There is no limit on earnings for workers who are in “full” retirement age or older for the entire year.
Rates have been rising steadily:
|
Measure |
2017 |
2018 |
2019 |
2020 |
2021 |
|
Maximum Taxable Earnings |
$127,200 |
$128,400 |
$132,900 |
$137,700 |
$142,800 |
|
Retirement Earnings Test Exempt Amounts, Under Full Retirement Age |
$16,920/year |
$17,040/year |
$17,640/year |
$18,240/year |
$18,960/year |
|
Retirement Earnings Test Exempt Amounts, The Year Full Retirement Age Is Reached |
$44,880/year |
$45,360/year |
$46,920/year |
$48,400/year |
$50,520/year |
More detailed information about the changes relevant to Social Security benefits in 2021 is available here.
