What Changes Are Coming to the Social Security Program in 2021?

social security program changes for 2021Every year in the fall, the Social Security Administration (SSA) announces its annual changes to the Social Security program, providing updates on income limits, benefit amounts and more for recipients. It is important to stay fully informed with Social Security’s changes in 2021 so you know what is expected to be paid and what it takes to continue qualifying for disability benefits.

If you need help with the initial application process or the appeals process after being denied benefits, reach out to an Appleton Social Security Disability lawyer from our firm today.  A consultation to learn more about your rights and options is free of charge and comes with no obligation to retain our services.

Cost-of-Living Adjustment (COLA)

The cost-of-living adjustment (COLA) is considered a raise that Social Security recipients are expected to receive for the upcoming year to help keep their benefits on par with inflation. The COLA has averaged 1.4 percent per year within the past decade. 

In 2021, about 70 million Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) recipients will see a 1.3 percent increase to their monthly benefits. Compared to last year, it is less than the COLA for 2020 at 1.6 percent and at 1.3 percent is tied for the second-smallest COLA in history.

However, for the average Social Security recipient, the 1.3 percent raise will translate to an extra $20 per month with an estimated monthly payout of $1,543.

To receive SSI benefits, your assets and income must not be worth more than the resource limit, which is $2,000 for an individual and $3,000 for a couple. The monthly maximum federal amount for 2021 is $794 for an eligible individual and $1,191 for an eligible couple.

Additional increases to Social Security benefits include:

  • A payment increase of $16 per month (from $1,261 to $1,277) for the average disabled worker
  • A payment increase of $20 per month (from $1,523 to $1,543) for the average retired worker
  • A payment increase of $30 per month (from $2,563 to $2,596) for the average aged couple, both receiving benefits

Payroll Tax Earnings

One of the biggest changes next year is an increase in the payroll tax earnings cap. Workers were required to pay a 6.2 percent Social Security tax in 2020 with their employer matching that payment on income up to $137,700. Any income earned above that limit is not subject to the tax.

For 2021, the tax rate will remain the same at 6.2 percent for employees (12.4 percent for those self-employed), but the income cap has increased by $5,100 to $142,800. This means that all earned income up to this amount will be taxable, which will affect approximately 6 percent of workers nationwide.

Income Limits for Disability Benefits

To qualify for disability benefits, you must demonstrate that you are unable to engage in any substantial gainful activity (SGA). Generally, you are engaging in SGA when you earn more than a certain monthly amount, which will vary based on the severity of your disability.

Blind SSDI recipients can earn up to $2,190 a month in 2021 without having their benefits stopped (SGA does not apply to blind SSI recipients). This is an increase of $80 per month or $960 extra annually.

Non-blind recipients can also earn up to $1,310 a month starting next year without losing their SSDI or SSI benefits. This is an increase of $50 per month or an extra $600 on an annual basis.

If you receive SSDI, the trial work period (TWP) is a work incentive that allows you to test your ability to work for at least nine months. During the TWP, you can receive your full benefit payments no matter how much you earn, provided you report your work activity and continue to meet the SSA’s rules for disability. In 2021, any month during which you earn over $940 will count toward your TWP.

Student Earned Income Exclusion

The student earned income exclusion is another work incentive that allows certain SSI recipients who are under age 22 and regularly going to school to exclude earnings from income. This allows students to keep more of their SSI benefits when they work.

In 2021, this means that the SSA will not count as much as $1,930 of earned income per month while attending school and working. The maximum yearly exclusion is $7,770. 

Social Security Retirement Age

Full retirement age is set to increase in 2021 by two months, to 66 years and 10 months for those born in 1959. Social Security's full retirement age will peak at age 67 in 2022 for anyone born in 1960 or later.

Age 62 is the earliest a recipient can claim retirement benefits. However, claiming early retirement benefits will result in a permanent reduction to your monthly payouts. Failing to collect Social Security past your full retirement age will mean being able to collect more than your normal payout.

For instance, if you wait to claim retirement benefits until age 70, you could get a 32 percent higher annual payout than if you started receiving benefits at full retirement age.

Reach Out to Our Firm for More Information

At Sigman Janssen, we understand how important Social Security Disability benefits are for recipients and their loved ones. Our lawyers have extensive experience dealing with the SSA and its strict regulations and policies. We are prepared to help you apply or appeal a denied disability claim.

There is also no risk in reaching out to learn if any of these changes to the Social Security program will affect your ability to maintain your disability benefits. Our firm is available anytime, day or night, to take your call. An initial consultation is free and there are no upfront fees to have us represent you.

Decades of Experience Helping Wisconsin Residents. Ph: (877) 888-5201