by Tom Winschel
Federal benefit rates increase when the cost-of-living rises, as measured by the Department of Labor’s Consumer Price Index (CPI-W).
The CPI-W rises when inflation increases, leading to a higher cost-of-living. This change means prices for goods and services, on average, are a little more expensive, so the COLA helps to offset these costs.
January 2021 marks other changes that will happen based on the increase in the national average wage index. For example, the maximum amount of earnings subject to Social Security payroll tax in 2021 will be higher. The retirement earnings test exempt amount will also change in 2021. You can read our press release for more information at www.ssa.gov/news/press/factsheets/colafacts2021.pdf.
We will mail COLA notices throughout the month of December to retirement, survivors, and disability beneficiaries, SSI recipients, and representative payees. Want to know your new benefit amount sooner? You can securely view and save the Social Security COLA notice online via the Message Center inside my Social Security in early December without waiting for the mailed notice.
If you don’t have an account yet, you will have to create your account by November 18, 2020 to receive the COLA notice online this year. my Social Security account holders can opt out of receiving a mailed COLA notice and other paper notices that are available online. You can choose text or email alerts when there is a notice in Message Center by updating your Preferences at www.ssa.gov/myaccount/opt-out.htmlso you always know when we have something important for you.
Be the first to know! Sign up for or log in to your personal account today at www.ssa.gov/myaccount. Choose email or text under “Message Center Preferences” to receive courtesy notifications. This way you won’t miss your online COLA notice!
You can find more information about the 2021 COLA at www.ssa.gov/cola.