A COLA or Cost-Of-Living Adjustment for Social Security disability and retirement recipients is in place for 2021.
Since 1975, Social Security’s general benefit increases have been based on increases in the cost of living, as measured by the Consumer Price Index. The SSA determined that the COLA for 2021 is 1.3% on October 13, 2020.
In 2021, Social Security Disability (SSD), Supplemental Security Income (SSI), and Social Security Retirement recipients will see an increase in their monthly payments.
The reason for a COLA is to make sure the recipients of these benefits are not affected by inflation. The Social Security Administration determines the COLA by using the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no increase, there will not be a COLA that year.
Earlier this year due to the effects of COVID-19, many were unsure if a COLA would happen in 2021. However, inflation picked back up in June which translated into a COLA for 2021.
The 1.3% increase will raise benefits payable to more than 64 million Social Security beneficiaries in January 2021. More than 8 million SSI beneficiaries will begin receiving increased payments on December 31, 2020.
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For individuals who are applying for SSD or SSI, there are important changes to SGA in 2021 as well. If you plan to work while applying for or receiving these benefits you may come across the word Substantial Gainful Activity (SGA). When someone is working, as an employee Social Security sets a limit on not how much you can work, but on how much you can earn. In 2021, the monthly gross amount an individual can make is $1,310.00. In 2020, the amount was $1,260.00 gross per month.
Although a COLA means the recipient’s monthly payments will increase, it also means the cost of living has also increased. This means prices for goods and services have increased enough to affect the cost of living.
Recipients of these benefits will be notified in December 2020 of the changes to their benefits. You can find this information in the message center of your My Social Security Account. Letters will also be sent.
If you have applied for SSD or SSI benefits or are considering applying and have questions, contact the attorneys at Berger and Green today at 412-661-1400 for a free no-obligation consultation.
Source: Social Security Administration, “Cost-of-Living Adjustment (COLA) Information for 2021.”
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