The Social Security Administration has again approved a cost-of-living adjustment (COLA) for the Social Security benefit starting in January 2021. The increase of 1.3 percent is calculated based on the year-over-year rate of inflation and will increase the average American worker’s benefit by about $20 per month.
The determination for the Social Security benefit increase uses a formula calculating the difference between the Consumer Price Index for Urban Wage Earners (CPI-W), a government measurement of prices typically paid for a basket of goods and services, in the third quarter of 2019 and the third quarter of 2020. The small increase reflects the current low inflation rate when no change in the index or CPI-W has fallen.
The most significant change to Social Security retirement benefits starting this year is the full-retirement age increase. People who turn age 62 in 2021 will need to wait until an older retirement age to claim their full retirement benefit. The full retirement age for those born in 1959 is 66 and 10 months, two months older than the full retirement age of 66 and 8 months for those born in 1958. The full retirement age increases in two-month increments for those born between 1955 and 1959 until reaching age 67 for everyone born in 1960 or later.
If you are unsure about when to take your Social Security Retirement benefits or are concerned you have enough saved for retirement, now is a great time to meet with your financial professional. The new changes to Social Security benefits may require extra retirement savings strategies that align with your goals.
Disclosure: This information is provided as general information and is not intended to be specific financial or tax guidance. The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This presentation is not endorsed or approved by Social Security Administration or any other Government Agency.
In addition, JP Williams is the Founder of Pillar Wealth Group who lives and works near Columbus, Ohio. JP founded Pillar Wealth Group with over 17 years of experience and specializes in financial planning, retirement planning, investment management, risk management, college planning, and estate planning. Contact us today to get started with your financial wellness journey.