The 1.3 percent cost-of-living adjustment (COLA) will pay benefits to more than 64 million SS beneficiaries in January 2021. Increased payments to more than 8 million SSI beneficiaries will begin Dec. 31, 2020. The Social Security Act ties the annual COLA to the increase in the Consumer Price Index (CPI-W).
Other adjustments that take effect every January are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the SS tax (taxable maximum) will increase to $142,800 from $137,700.
SS and SSI beneficiaries are normally notified by mail starting in early December about their new benefit amount. Most people who receive SS payments will be able to view their COLA notice online through their personal my Social Security account. Create or access your my Social Security account online at www.socialsecurity.gov/myaccount.
Information about Medicare changes for 2021 will be available at www.medicare.gov. For SS beneficiaries receiving Medicare, SS will not be able to compute their new benefit amount until after the Medicare premium amounts are announced. Final 2021 benefit amounts will be communicated to beneficiaries in December through the mailed COLA notice and my Social Security’s Message Center. For more information, visit www.socialsecurity.gov/cola.