The Social Security Administration has again approved a cost-of-living adjustment (COLA) for Social Security retirement benefits starting in January 2021. The increase of 1.3 percent will increase $20 per month for the average American worker and is calculated based on the year-over-year inflation rate.
The most significant change starting this year is the full-retirement age increase. People who turn age 62 in 2021 will need to wait until an older retirement age to claim their full retirement benefit. The full retirement age for those born in 1959 is 66 and 10 months, two months older than the full retirement age of 66 and 8 months for those born in 1958. The full retirement age increases in two-month increments for those born between 1955 and 1959 until reaching age 67 for everyone born in 1960 or later.
Here are additional strategies to help you get the most out of your Social Security Retirement Benefits:
- Work 35 or more years and earn a higher salary year over year.
- Do not claim benefits until your full retirement age.
- Delay taking Social Security benefits until age 70.
- Use a Social Security spousal benefits strategy.
- Maximize Social Security survivor benefits and claim survivor benefits for your children.
- Estimate your longevity before taking benefits.
Additional changes to be aware of in 2021:
- The full retirement age will increase to 66 and 10 months for those born in 1959.
- The earnings subject to the Social Security tax will climb to $142,800.
- Social Security beneficiaries age 65 and younger can earn up to $18,960 before their benefit is temporarily withheld.
If you are unsure about when to take your Social Security Retirement benefits or are concerned you have enough retirement savings, now is a great time to do a checkup with a Trajan Wealth fiduciary advisor. These new changes may require extra retirement savings strategies that align with your goals.
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