The Social Security Administration has released some updated figures for 2021, and we will take a look at them in this post. Medicare should be releasing their changes in the near future, and we will pass along that information as soon as it becomes available.
Cost Of Living Adjustment (COLA)
Prices tend to go up year after year, and the Social Security Administration (SSA) acknowledges this fact of life. The Department of Labor maintains the Consumer Price Index to keep a finger on the pulse of the cost of living.
It is used by the SSA when they are considering potential cost-of-living adjustments that can be made annually. They have determined that a 1.3 percent increase is appropriate for 2021 given their data.
The average benefit for an individual beneficiary this year is $1523 a month. Someone that was receiving exactly this amount would see a bump up to $1543 each month if a 1.3 increase is added.
This is obviously not a very big increase, but it’s better than nothing. In 2009, 2010, and 2015, there were no cost-of-living adjustments.
To make matters worse, as you will see in another section, seniors do not see all the increases in their monthly direct deposits.
Early Benefit Earning Limit
The eligibility age for a full Social Security benefit varies depending on the year of your birth.
People that were born between 1943 and 1954 become eligible when they celebrate their 66th birthdays. The age then goes up by two months for every birth year until 1960 when it tops out at 67 years of age.
It is possible to apply for an early benefit when you are 62, and this sounds appealing on the surface, but the benefit would be reduced by 25 to 30 percent. The exact amount of the reduction would be based on your birth year.
This is one drawback of the early benefit, but there is another negative that should be a deal breaker if you are still working full time. Your benefit is reduced by one dollar for every two dollars that you earn above a certain prescribed amount.
The early benefit earning limit this year is $18,240, and it is going up to $18,960 in 2021.
There is a maximum amount of income that can be taxed for Social Security purposes. This year, the maximum is $137,700, and it will go up to $142,800 next year.
Since there is a cap on the income that can be taxed for old-age, survivors, and disability insurance, there is also a maximum Social Security benefit. It is $3011 a month right now, and it will rise to $3148 when 2021 rolls around.
Medicare Part B Increase
The Medicare program is broken up into four parts, and Part B is the portion of the program that pays for treatments that are provided by doctors and other health care providers. You have to pay a monthly premium, and it is adjusted upward annually to account for rising costs.
In light of the impact of the pandemic, the temporary spending measure that is in place right now includes a provision for the Part B increase that will be revealed in November. It cannot be more than 25 percent higher than it would have been under ordinary circumstances.
Outside of this special temporary provision, there is a “held harmless” rule that prevents a reduction in the benefit if the Part B increase exceeds the COLA.
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Though there is no charge, we ask that you register in advance so we can reserve your spot. You can visit our seminar page to see the dates and obtain registration information.
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If you already know that it is time for you to discuss your estate planning objectives with a licensed attorney, we are here to help. You can set up a consultation if you call us at 860-548-1000, and there is a contact form on this site you can use to send us a message.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
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