Social Security benefit increase

The Social Security Administration recently announced that there will be a 1.3% cost-of-living adjustment (COLA) in retirees’ Social Security benefit payments beginning in January 2021. Social Security benefits are adjusted annually to protect retirees from the effects of inflation. The COLA is an increase—if any—as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) presocial pared by the Bureau of Labor Statistics. 

For Social Security beneficiaries receiving Medicare, Social Security will not be able to compute their new benefit amount until after the Medicare premium amounts for 2021 are announced.

The increase in the COLA also influences the earnings limit for those collecting early Social Security. The earnings limit is the amount an early Social Security recipient can earn before a reduction in benefits takes place. The current earnings level is $18,240 and will rise to $18,960 in 2021.

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