Social Security Benefits to Increase by 1.3 Percent in 2021
AAFCPAs Wealth Management would like to make clients aware that the Social Security Administration announced that Social Security and Supplemental Security Income (SSI) benefits for nearly 70 million Americans will increase 1.3 percent in 2021. Cost-of-living adjustments (COLA) have averaged 1.4 percent in the past decade.
The 1.3 percent cost-of-living adjustment will begin in January 2021. Increased payments to SSI beneficiaries will begin on December 31, 2020.
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. The earnings limit for people reaching their “full” retirement age in 2021 will increase to $50,520. There is no limit on earnings for workers who are “full” retirement age or older for the entire year.
Medicare premiums (which often are deducted from Social Security) has not been announced yet. As part of a recent short-term funding bill, Congress capped how much Medicare premiums can increase to 25% of what they would have increased in a normal year.
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