The Social Security Administration has announced a cost of living adjustment (COLA) to recipients’ monthly Social Security and Supplemental Security Income (SSI) benefits. More than 69 million Americans will see the 1.3% increase in their payments beginning in January 2021.
The increase is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers and was put in place to ensure the purchasing power of these benefits isn’t eroded by inflation. In addition to the cost of living adjustment, the Social Security Administration also announced that the maximum amount of earnings subject to Social Security tax will increase to $142,800 from $137,700.
This figure is a smaller increase than last year’s 1.6% adjustment. According to the Social Security Administration, on average, retired workers currently collect $1,523 a month in Social Security payments, or roughly $18,276 a year. Raising the COLA by 1.3% will add about $20 a month to those payments, or around $240 for the year.
You may also like to know that we’re now in the annual open enrollment period for Medicare. You have until December 7 to review your benefit choices and costs and elect new coverage. If you haven’t yet enrolled in Medicare, keep in mind you must do so within the seven-month period around your 65th birthday.
The end of the year is a good time to review your financial plan overall to ensure you’re well-positioned for next year and beyond. A disciplined, comprehensive strategy remains the best approach to help you achieve your long-term financial goals.
Material prepared by Raymond James for use by its advisors. Changes in tax laws or regulations may occur at any time and could substantially impact your situation. You should discuss any tax or legal matters with the appropriate professional.