Big Changes Coming to Social Security in 2021
Social Security is the financial lifeblood for America’s seniors. It’s estimated that 62% rely on Social Security benefits for more than half of their retirement income. The Seniors Trust is devoted to protecting and expanding Social Security retirement benefits for every American senior. That’s why The Seniors Trust is concerned about some of the changes coming to Social Security next year.
NewRetirement.com recently did a deep dive into this subject and many of their concerns align closely with The Seniors Trust’s mission.
What to Worry About
Insufficient COLA – The Cost of Living Adjustment for 2021 is only 1.3%. That equates to an average increase of just $20 per month for the 70 million seniors relying on Social Security benefits. The 2020 COLA was 1.6%. It dropped for next year due to low inflation. The Seniors Trust maintains that The Consumer Price Index for the Elderly (CPI-E) should be used to calculate Social Security Cost-of-Living Adjustments (COLAs) instead of the Consumer Price Index for Urban Wage Earners (CPI-W) now used. The CPI-E takes into account the unique spending habits of seniors — especially related to the costs of healthcare and prescription drugs — and offers a more realistic COLA for retirees.
Retirement Age is Increasing – The full Social Security retirement age (the age at which you can collect 100% of your monthly benefit) will increase by two months next year. In 2021, the full retirement age will be set at 66 years and 10 months – and will jump to 67 years in 2022. While workers may still begin claiming Social Security benefits at age 62, the amount of their benefit will be almost 30% less than if they were to wait until full retirement age to claim benefits.
Increased Taxes – Taxable income is increasing for 2021. The maximum amount of wages taxed for Social Security will be $142,800 next year, up from $137,700 in 2020. However, bigger benefits are on the way for some seniors. According to the Social Security Administration, the maximum monthly benefit at full retirement age will increase to $3,148 in 2021 – that’s an extra $1,677 a year for upper-income wage earners during retirement.
What the Future May Hold
President-elect Biden will take the oath of office in 2021 and, if he holds true to his campaign promises, that could mean some good news for our nation’s Social Security system. The Biden platform calls for switching Social Security COLA to the CPI-E calculation favored by The Seniors Trust. The Biden Plan for Older Americans also outlines specific measures meant to protect and strengthen Social Security.
The Seniors Trust is also working to protect and strengthen Social Security by pushing lawmakers to pass the Social Security Expansion Act. This landmark bill buttresses the long-term solvency of Social Security by expanding benefits for seniors – not cutting them. With more than 60 new members of Congress taking the Oath of Office, The Seniors Trust will be stepping up its efforts to encourage our nation’s new Representatives and Senators to enact this important piece of legislation.
Please, sign the petition to Congress and join The Senior’s Trust as we strive to improve the lives of senior citizens.
