This increase is one of the lowest the Social Security Administration (SSA) has ever had. In 2020, beneficiaries received a 1.6 percent increase. This new change, however, will come out to about $240 per year for the average retired worker.
How is the Cost of Living Determined?
The cost of living is determined by the Department of Labor’s Consumer Price Index (CPI-W) and rises with inflation. The prices of goods and services are more expensive when inflation increases, so the cost-of-living-adjustment (COLA) helps offset these high costs.
The SSA will mail COLA notices throughout December to SSDI and SSI recipients. If recipients want their updated benefits sooner, they can obtain the SSA’s COLA notice online. This information can be obtained in December prior to receiving the mailed notice, but you must create an online account by November 18 to receive the 2021 COLA notice online.
Impact of the National Average Wage Index
January 2021 will not only indicate an increase in benefits and payments but will also mark other changes. The increase in the national average wage index will mean that the maximum amount of earnings subject to Social Security payroll tax in 2021 will also be higher, increasing from $137,700 per year to $142,800 per year.
There will also be an increase in how much income working recipients can earn before their Social Security disability benefits are reduced. Additionally, it will now take $1,470 to earn a single Social Security credit, which is a $60 increase from 2020. However, the Social Security tax rates will remain the same for 2021 for employees and self-employed workers.
Call Our Firm Today
If you have any questions regarding these changes to Social Security disability benefits, contact an experience legal advocate from our firm today. Our team at the Khaki Law Firm can help you understand how these changes may impact your entitlement to disability compensation.
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