Tuesday, December 15, 2020

Social Security and SSI benefits COLA increase 1.3% starting January 2021


You probably already got a letter from the federal Social Security Administration about your 2021 benefits increase. But in case you didn't, starting in January you'll be getting a 1.3% Cost of Living Allowance (COLA) increase on your Social Security or Supplemental Security Income (SSI) benefits. 

The COLA by law is calculated using a formula based on the Consumer Price Index (CPI) from the previous year's third quarter. So in years when there is more consumer price inflation the COLA is likely to be higher for the following year. This 1.3% increase is one of the lowest since the COLA was implemented in 1975, though there have been 3 years where there was no increase at all.

You don't have to do anything to receive the increase, it will come automatically in your benefits starting with your January disbursement. Strangely enough, SS and SSI pay benefits for the previous month, so technically the COLA applies to your December benefits, but you receive them in the January disbursement. 

The average monthly Social Security benefit amount in 2020 was $1503, so the average increase from this COLA will be $19.53. Might get you a few bottles of your favorite caramel-colored beverage.

For more information see the Social Security Administration's website page about the COLA

No comments: