Upcoming Changes to Social Security in 2021
Tampa, FL (Law Firm Newswire) February 25, 2021 – Important changes lie ahead in 2021 for many Social Security recipients.
Each year, the Social Security Administration (SSA), the government organization responsible for overseeing the payment of all Social Security benefits, makes certain adjustments. It is essential to understand these changes for those who receive benefits or plan to receive benefits in the future.
Regarding the upcoming changes for 2021, the SSA has announced the following:
COLA Increase – Earlier this year, the SSA announced that it would be increasing the monthly benefit amount by 1.3 percent to account for inflation. The SSA reviews the amount of the monthly benefits annually to determine if it keeps up with inflation.
Tax Cap Increase – Social Security benefits are funded by payroll taxes. Currently, employers and employees each pay 6.2 percent. In 2020, the maximum amount of earnings subject to the tax was $137,700. In 2021, the maximum salary will increase to $142,800. Earnings over this amount are not subject to the payroll tax.
Earnings Test Revisions – If someone elects to begin receiving Social Security benefits before full retirement age (FRA), they receive a reduced benefit amount. In 2020, anyone who retires before reaching FRA will have $1 in benefits reduced for every $2, they make above $1,520 a month, or $18,240 a year. In 2021, this figure will increase to $1,580 a month or $18,960 annually.
The earnings test limit increases dramatically to $4,210 a month or $50,520 a year, beginning in the first year of retirement. This figure is up from $4,050 a month, or $48,600 a year, from 2020. The SSA will hold back $1 in benefits for every $3 you earn over the earnings limit. Except, once someone retires, the SSA no longer imposes the earnings limit.
Work Credit Requirements – To qualify for Social Security benefits, a worker must accrue a certain amount of work credits. The amount of income needed to accrue one work credit is increasing from $1,410 to $1,470. Thus, someone can earn four work credits per year, assuming they make at least $5,880 annually.
Increase in SSI Benefits – Recipients of Supplemental Security Income will also realize an increase in their monthly benefits. Individual benefits will increase by $11 per month, from 4783 to $794. Couples receiving SSI benefits will see a $16 per month increase, from $1,175 to $1,191.
Attorney David Magann is a Florida social security and disability attorney with extensive experience helping individuals qualify for benefits and understand how they can fit into their comprehensive estate plans. Attorney Magann is a compassionate advocate who diligently advances his clients’ interests at every opportunity, providing practical advice and counsel on various legal issues. Attorney Magann has offices conveniently located in Brandon and Tampa and can be reached at http://www.floridasocialsecurity.com/.