Home Articles Social Security Cost Of Living Adjustment (COLA) 2021: What it means for...

Social Security Cost Of Living Adjustment (COLA) 2021: What it means for you

What was the Social Security COLA in 2021?

Social Security benefits are being increased by 1.3% in 2021

In comparison, in 2020, Social Security checks were increased by 1.6%, while in 2016 there was no increase.

If you were getting a $1,500 benefit in 2020, that benefit is going to be increased to about $1,519.50 in 2021. That is around $240 more over the course of the year. 

What is Social Security COLA based on?

COLA is based on the rate of inflation of the previous year. The government uses the Department of Labor’s Consumer Price Index to determine the rate. 

The goal of the COLA is to help offset the increase in goods and services that occurred over the previous year. 

When the increase is small, that means inflation did not increase a significant amount, or even decreased. When the adjustment is higher, that means inflation significantly increased. 

What about the Medicare hold harmless provision?

The Medicare hold harmless provision prohibits Medicare Part B premiums from reducing Social Security benefits. 

This means that if Medicare Part B premiums rise, they cannot increase more than the Social Security COLA that year. 

For example, in 2015, when the COLA was zero, Medicare Part B premiums did not increase for Social Security beneficiaries. People new to Medicare that year did pay the increased Medicare price though.

In the following year, when the COLA did increase Social Security checks, Medicare premiums were increased for the people who did not have an increase in the previous year. 

The hold harmless provision will not be in effect in 2021 as the Social Security COLA is more than enough to cover the Medicare Part B increase. 

Will the increase in Medicare take away my Social Security increase?

Many clients think that their Social Security increase is going to be automatically wiped away by the increase in the monthly premium for Medicare Part B.

In 2021, the Medicare Part B premium is $148.50, which is up $3.90 from 2020.

That means that the average person, whose Social Security check rose by about $20 in 2021, will only lose about ¼ th of their COLA to Medicare.


Why is the Social Security COLA important to me?

While most retirees are going to enjoy the increase because it means more money for them, it is also important to understand how your Social Security functions as the cornerstone of your retirement income. 

In retirement planning, there is a metaphor of a three legged stool used to illustrate a stable income in retirement.

One leg is going to be your savings and investments, the other leg is going to be your IRA, 401(k), and/or pension, and the last leg is going to be your Social Security check. 

You cannot have a stable income in retirement without having three stable legs of your retirement stool. 

According to the Social Security Administration, Social Security checks make up about 40% of beneficiaries pre-retirement income. 

While the 2021 1.3% increase is pretty minimal, Social Security timing, meaning when you choose to take your check, can mean the difference between thousands of dollars over your lifetime. It can mean the difference between having a stable leg of your stool or not. 

The Basics of Social Security Timing

Social Security can be started anywhere from the age of 62 to the age of 70.

When you get your full benefits is based on your full retirement age, which has not been age 65 for a long time. 

For anyone born between 1943-1959, full retirement age has been somewhere between 66-67. For anyone born after 1960, it is going to be age 67. 

If you have a spouse, or young children, you also need to consider what benefits they can claim on your record as well when you are looking to start your check. 

If you are divorced or widowed, you should look into your options to claim off of your ex or deceased spouse’s record. 

Many retirees choose to just take their check without thinking about it, but a little forethought can gain you thousands of dollars over your lifetime. 

Cardinal can get you a free Social Security timing report if you fill out the form below! 


Listen To Finishing Well on Truth

Newest Live Episodes of Finishing Well are on The Truth Network

Finishing Wellhttps://www.cardinalguide.com/finishing-well/
Retirement planning involves a lot more than just managing your money. This show is the complete guide to planning for and living in retirement, helping families finish well. Host Hans Scheil will discuss a new topic every week ranging from Social Security and Medicare to IRAs and taxes. Follow along each week by downloading the corresponding chapters below for free! New episodes air: Finishing Well Schedule on Truth Network
- Advertisment -

Recent Posts

The Gifts that Keep on Giving | Sunday Message

SoCal Harvest is just a week away! Join us in person or online on Sunday, October 3. If you are a Christian, God has personally...

22. The Gospels as Stories | Discover the Word

Dr. Jeannine K. Brown, a popular writer, teacher, and expert on the Gospels, joins the Discover the Word group to show us how reading the Gospels piecemeal, one story at a time, may miss the point the gospel writer was trying to convey. Be part of the...

Let God Take Care of Your Worries

Guest Bob Young talks about his faith journey and how God has helped him through difficult times.

God in Hollywood

Guest host Ann Ault is joined be her good friends Wes and Amanda Llewellyn. Wes and Amanda own , a Christian film making production company. Also, is joined by documentary film maker Garritt Hampton to discuss his latest project for another...

What Causes God to Listen

Welcome to Masculine Journey fellow adventurers! The theme of listening continues this week. This time the guys talk about what causes God to listen. The clips are from "Interview With God," and "The Ten Commandments." The journey continues, so grab...

What Causes God to Listen After Hours

Welcome fellow adventurers! The discussion on what causes God to listen continues right here on the Masculine Journey After Hours Podcast. The clips are from the television show "The Chosen," and the film "It's a Wonderful Life." There's no...

Medicare 101 The Map

Feeling lost when it comes to medicare? Be lost no longer as Finishing well presents, medicare 101 the map. It's a guide to show you the way. Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement”...

Fulfill Your Ministry

A pastor’s work in pointing people to follow Jesus is extremely challenging in the current culture. Study along with us on Truth For Life as Alistair Begg looks at the apostle Paul’s timeless exhortations for Timothy to persevere to the end. Listen...

Why We Should Be Studying the Book of Revelation | Special Interview

The person who reads, hears, and keeps the words of Revelation will be blessed in a special way. That alone is reason enough to...

The Church Jesus Would Attend Part 2-Part A

The Church. Who really needs to be a part of it? Why should we belong to something so archaic and so narrow? The culture around us seems to ask this question relentlessly, but what is the answer? Pastor Skip Heitzig presents a series of reasons why the church, as Christ established it, is so vitally important to the Christian walk. From God's original intent for His church, to the ways in which He uses us today, and the reasons why people attend and leave the church, this series emphasizes the importance of the Church and the need to revere it as divinely established.

%d bloggers like this: