For tens of thousands of Americans, there is no plan that places more emphasis on their financial well-being than social security.
According to the Social Security Administration (SSA), 62% of current retirees have to account for at least half of their monthly income. In addition, More than 15 million retired workers Based on the Center for Analysis of Budget and Policy Priorities, every month they are lifted out of poverty as a result of what they guarantee.
Social Security beneficiaries receive a “promotion”
Given the importance of the program, it is not surprising that the most anticipated announcement each year will be the Social Security Administration’s October Cost of Living Adjustment (COLA) release in October. Think of cola as a “hike” that beneficiaries receive to pay for inflation.
Since 1975, the Consumer Price Index (CPI-W) for urban wage earners and clerks has been the social security inflation index. There is the CBI-W Eight major cost categories And dozens of subdivisions, each with their own weight. Price changes for goods and services covered by CPI-W can be steeped, which is used to determine whether inflation (rising prices) or deflation (falling prices) occurs.
As for social security CPI-W measurements from the third quarter (July to September) Factor in cola calculation. While it would be useful to identify other nine-month data trends, they have no bearing on whether or not users will receive a large monthly payment in the coming year. If the average CPI-W reading from the third quarter of the current year is higher than the average CPI-W reading from the Q3 of the previous year, users will receive a rounded payment increase, with an annual percentage change. To the tenth place of one per cent.
As reported on Oct. 13, Social Security beneficiaries Expect to get 1.3% cola When the calendar changes to 2021.
This will be the average monthly social security payment in 2021
The question is, what does 1.3% cola really mean to users? Let’s take a closer look.
As of September, 64.75 million people pay monthly social security benefits, of which nearly 46.1 million are retired workers. The average retired labor benefit last month was 5 1,519.07. According to recent estimates from SSA, the monthly retirement pay is expected to reach 5,523 by December 2020. And a factor of 1.3% on the cola jump, which will rise from $ 20 to 5,543 in January 2021. In other words, the average retired worker is going to net an additional $ 240 by 2021.
For workers with disabilities, the increase will be nominally a little less. All beneficiaries are expected to receive a 1.3% cola, but the program’s 8.25 million disabled workers brought home only $ 1,259.12 a month as of September. By December, SSA estimates that this month’s payments will rise slightly to 26,261. Thus, the 1.3% cola should be estimated to increase by $ 16 per month by January 2021, raising the average disabled worker benefit to 27,277.
Following the 1.3% cola that suits you, SSA offers several rated average-paying scenarios:
- One-year-old couple, both benefiting, are expected to increase by $ 33 a month by 2021 to $ 2,596.
- Elderly widows or widowers can expect a 45 2145 increase in their monthly salary to 45 1,453.
- A disabled worker with one spouse and one or more children can be expected to rise from $ 29 a month to 22,224 in January.
- It is estimated that a widowed mother with two children will increase her salary to $ 39,300 per month.
This is good news / bad news for users
Consider how the corona virus infection sent the price of various goods and services Screams less between March and May, The fact that nearly 65 million social security beneficiaries are receiving cola is really cool news. Healthy improvements in food inflation and year-over-year prices for shelter and medical care services are guaranteed by 2021. This is good news.
1.3% cola relationships for the second smallest positive increase since merging with the CBI-W program in 1975. This is complicated because inflation for shelter and health care costs – two of the most important expenses for seniors – is more than 1.3% on an annual backward -12-month basis. In other words, the 1.3% cola is not going to reduce it for retired workers, and their Social Security income is likely to lose once again purchasing power.
Earlier this year, The Senior Citizens’ League, an independent senior advocacy group, released an analysis of the purchasing power of social security income. Decreased by 30% since 2000. That means $ 100 of the Social Security income used to purchase in 2000 can now only be used to buy identical goods and services worth $ 70. Inherent flaws with CPI-W Make sure seniors lose purchasing power over their Social Security income.
The benefits on board are increasing by 2021, but there isn’t much to be excited about Social security Recipients.