Will Social Security get a raise in 2021?

What do benefits look like in 2021?

In short, the answer is yes, Social Security beneficiaries received a raise in 2021. This increase in funds will impact an estimated 70 million Americans throughout the country who receive benefits from this program.

How much of a raise did beneficiaries get from the SSA?

According to the Social Security Administration (SSA), the program provided a 1.3% raise to recipients in 2021. This translates to an estimated $20 increase per month for single beneficiaries and $33 for a married couple, or an average monthly benefit payment of $1,543 for single recipients and $2,596 for a married couple.

Although the increase is beneficial, it is less then previous years. In 2020, for example, the agency gave recipients a 1.6% increase and a 2.8% increase in 2019. The agency explains that this increase is a cost-of-living adjustment (COLA) designed to help the benefits keep pace with inflation. The agency calculates the COLA by using data from the Consumer Price Index for Urban Wage Earners and Clerical Workers, which focuses on national, not regional, prices. If the agency finds the prices do not increase, the resulting COLA is zero. This can happen. It happened shortly after the Great Recession in 2010 and 2011. Experts were concerned that due to the uncertainty of 2020, the agency would find that there was no COLA for 2021. As such, there is a "something is better than nothing" mentality amongst some professionals.

The agency also announced an increase to the Social Security Disability Benefits program. This program provides funds for those who are no longer able to work. In 2020, the program was able to provide qualifying participants with $1,261 in benefits per month. This goes up slightly in 2021, to $1,277.

What does this mean for the future of the Social Security program?

The Social Security and Medicare Boards of Trustees recently reported that funds are currently expected to deplete by 2035. If this estimate holds true, beneficiaries will experience a drop in their scheduled benefits in 2035. Current predictions state beneficiaries would receive 75% of scheduled benefits. The group expects to be able to provide benefits at this reduced rate through 2093. At which time the funds would be gone.

Legislative action could address this issue and help provide additional funds to the program. We will provide updates on this ongoing issue as they become available.

What does this mean for those who receive support from the Social Security program?

The increase went into effect December 31, 2020. The agency states it mailed notices throughout the month of December to provide information about the upcoming changes. These changes are automatic, so recipients should already see the increase reflected in their payments.