More than 64 million Social Security beneficiaries will get their lowest cost-of-living adjustment in four years in 2021.
Recipients will receive a 1.3% uptick in their benefits payments in January, the Social Security Administration announced Oct. 13. The COLA for next year is 30 basis points lower than in 2020 and less than half the amount in 2019. In another adjustment for next year, the maximum amount of earnings subject to Social Security payroll taxes will rise to $142,800 from $137,700.
Some experts had predicted the 1.3% COLA last month, with some forecasts expecting the uptick to be even lower. Senior advocates often criticize the COLA formula, saying benefits aren’t keeping up with climbing expenses like Medicare Part B premiums.
Next year’s lower COLA comes as the coronavirus pandemic continues to upend the economy.
Although it’s “modest,” the COLA for 2021 “is needed to help Social Security beneficiaries and their families try to keep up with rising costs,” AARP CEO Jo Ann Jenkins said in a statement.
“The guaranteed benefits provided by Social Security and the COLA increase are more crucial than ever as millions of Americans continue to face the one-two punch of the coronavirus’s health and economic consequences,” Jenkins said.
Anil Vazirani is president of Secured Financial Solutions, independent insurance advisor investment advisor rep with a fiduciary obligation and in the financial services industry since 1994. A+ rating with the Better Business Bureau for over a decade and a half, members in good standing with the National Association of Insurance and Financial Advisors.
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