Video: Social Security Cost-of-Living Adjustment Increased for 2021 November 2, 2020
Social Security Cost-of-Living Adjustment Increased for 2021
Hey everyone, this is John Keyes with Petersen Hastings. The Social Security Administration just announced that the official Cost-of-Living Adjustment (COLA) for next year will increase by 1.3%. In this video, we’ll take a look at what that might look like for you if you are currently receiving social security.
The 1.3% increase will bump the average monthly benefit for all retired workers by $20 – which equates to an extra $240 per year, starting next January. The average retired couple’s collective payment will jump from $2,563 per month to $2,596—a $33 monthly raise—for two people. This is a lower increase than 2020’s 1.6% increase and marks the fifth time since 2010 that there will be an extremely low, or even no, annual inflation adjustment.
The flat COLAs make it more difficult for retirees to be able to afford to pay for Medicare Part B premiums, which are going up about three times faster than the annual benefit increases. The cost-of-living adjustment is calculated using the consumer price index for urban wage earners and clerical workers, or CPI-W. The problem with that index is it focuses on younger working adults who are under age 62. Consequently, Medicare costs are not represented at all. It also doesn’t account for other rising costs seniors face, including prescription drugs, food and housing, according to the National Committee to Preserve Social Security and Medicare.
If you have any further questions regarding this announcement or anything else in particular, I’d be happy to meet with you one-on-one to discuss your situation.