Social Security COLA announced
Social Security administration announced a 1.3% increase for roughly 70 million recipients beginning January 1, 2021. While this increase falls below the ten year average, it is higher than some people projected. The 1.3% pay raise will mean a $20.00 increase for the average monthly check, rising from $1,523 to $1,543.
Other notable increases will be the amount retired workers can earn before losing any Social Security benefits; this increases from $1,520 per month to $1,580. Under the early retirement distribution rules of Social Security, if a worker retires (begins collecting retirement benefits before achieving their full retirement age) there is a monthly limit of earnings. For every two dollars earned above this monthly amount will result in losing one Social Security benefit dollar. This is calculated/deducted the following year when income taxes are filed. Any benefits that are recaptured due to this earnings limitation are returned when the worker reaches full retirement age in an actuarial calculation that increases their monthly benefit.
Wage earnings subject to Social Security taxes are also being increased from $137,700 to $142,800. This will result in an additional $316 collected from payroll tax per earner ($632 including employer match). Once earnings reach $142,800 additional income will be except from Social Security taxation, however, every dollar earned is subject to a minimum 1.45% Medicare tax.
With an increase in Social Security benefits usually comes an increase in Medicare Part B premium. For those people who pay their Medicare premiums directly from their Social Security check there is a hold harmless clause that prevents premiums rising above their Social Security pay raise. This doesn’t guarantee an increase in monthly benefits, however, it does prevent their benefits from decreasing due to Medicare premiums. The projections for 2021 Medicare Part B premium is an increase of $8.40 to $153.00; there has been some discussions of reducing this figure or capping it at $2.10 due to the pandemic. Look for an official announcement sometime the end of October.
Quick facts for 2021: The average Social Security check for 2021 will increase to $1,543; the maximum Social Security benefit check will increase to $3,148; qualifying income for a quarterly unit/credit is $1,470; and for those people turning 65 in 2021 your full retirement age is 66 and 4 months. In Texas roughly 9 out of every 10 persons over the age of 65 are collecting social security benefits. For a complete fact sheet go to www.Advancesenioroptions.com, download Social Security 2021 Fact Sheet.