Employees planning for retirement or those who can’t work due to a disability will oftentimes claim Social Security benefits to help with the cost of living. Beneficiaries receive monies each month, which is calculated by their earnings from paying Social Security taxes, to help cover rent, groceries, medical bills and more.
Disabled and retired Americans are relying more and more on Social Security benefits to help them get by, especially with the COVID-19 pandemic affecting the health and finances of millions.
In October 2020, the Social Security Administration (SSA) announced beneficiaries would be receiving a 1.3 percent increase in 2021, a much-needed decision for those who rely on those benefits.
Our team at Westmoreland Law wants to answer your questions regarding this change.
How much will I receive?
“Social Security is arguably the most important and successful program in our nation’s history, providing vital benefits that individuals earn through a lifetime of hard work and contributions to the system,” Jenkins says. “It is the largest source of retirement income for most Americans and provides nearly all income (90 percent or more) for 1 in 4 seniors.”
How’s this number calculated?
This year, the third-quarter numbers from 2019 were compared to 2020’s and the percentage change between them becomes the COLA for the following year, starting in January. If there’s no change, or if there’s a decline in the CPI-W, there’s no increase in Social Security benefits.
“Social Security is arguably the most important and successful program in our nation’s history, providing vital benefits that individuals earn through a lifetime of hard work and contributions to the system,” Jenkins says. “It is the largest source of retirement income for most Americans and provides nearly all income (90 percent or more) for 1 in 4 seniors.”
Is this the average increase?
But because of the coronavirus pandemic, the increase this year comes as a bit of a surprise. With many disabled and retired Americans struggling to stay afloat, and payroll taxes decreasing because of high employment rates, the Social Security trustees estimate that the retirement fund for Americans will run out by 2035 if this continues.
According to the SSA, almost 50 million retired workers and their dependents are receiving benefits. In addition, there are nearly 10 million disabled Americans also receiving benefits. Eighty-nine percent of workers are covered by Social Security in the event of a severe and prolonged disability.
