Most of us are happy and relieved to see 2020 in our rearview mirrors, right? The new year promises new experiences and goals. Even the Social Security Administration alters its benefits and procedures from year to year. Let’s look at some of the Social Security 2021 changes that might affect you.
An Increase in Benefits
Most years, Social Security determines a cost-of-living adjustment (COLA) for monthly benefit programs. In 2021, people receiving Social Security will see a 1.3% increase in benefits. The average Social Security recipient should see about $20 more per month.
Maximum Taxable Earnings Increased
Employees paid a 6.2% Social Security tax on up to $137,700 in earnings in 2020. The 2021 rate did not change, but the income cap rose to $142,800.
The increase in Social Security maximum earnings has an additional effect on your Social Security benefits. Social Security also increased the maximum monthly Social Security benefit from $3,011 per month to $3,148.
Full Retirement Age Is on the Move
You can request Social Security benefits as early as age 62. However, your monthly benefits are permanently reduced if you retire before your full retirement age.
By law, the full retirement age increases by two months each year until age 67. In 2020, the full retirement age for people age 62 was age 66 and eight months. According to Social Security, people born from 1960 on will not be at full retirement age until they celebrate their 67th birthday.
Benefit Recipients Can Enjoy an Increase in the Earnings Limit
It’s possible to work while receiving Social Security benefits. However, your benefit payments decrease if you exceed the current annual income limit.
In 2020, the limit for people who had not reached full retirement age was $18,240. The 2021 increase boosts the annual limit by $720 to $18,960.
The annual limit is very different if you have reached full retirement age. The income limit in 2020 was $48,600. In 2021, that limit increased to $50,520.
Benefits generally are not withheld from people who have achieved full retirement.
Social Security Benefits Rose
The increase was slight, but everything helps. Legally blind recipients of SSDI will see an increase of $80 per month. Non-blind recipients can expect their maximum benefit to be $1,310, an increase of $50.
The Work Credit Limit Increased Also
To qualify for some Social Security benefits, you have to meet a work credit requirement.
Were you born in 1929 or later? If so, you need at least 40 work credits. Every year, workers can earn up to four credits based on their income. In 2021, you must earn $1,470 per work credit. That’s an increase of $60 from 2020’s limit.
Do You Need to Apply for Social Security Benefits?
Many first-time claims are denied. When navigating government benefit programs, it helps to have someone in your corner. The attorneys at The Law Offices of Martin Taller have the experience and ability to take on your case. For a free consultation, call us at 714-385-8100. We assist clients throughout Southern California from our home office in Anaheim.