​$1,180
$1,970
$1,170
$1,950
Every October, the Social Security Administration (SSA) announces its annual changes to the Social Security program for the coming year. Here are the Social Security changes that were announced in 
Oct. 2020 to take effect on Jan. 1, 2021, according to the SSA annual fact sheet. Keep them in mind
 when you update your Social Security information.
KEY TAKEAWAYS
Social Security recipients got a 1.3% raise for 2021, compared with the 1.6% hike beneficiaries 
received in 2020.
Maximum earnings subject to the Social Security tax also increased—from $137,700 a year to 
$142,800.
Other changes for 2021 included an increase in how much money working Social Security
recipients can earn before their benefits are reduced and a slight rise in disability benefits.
Social Security tax rates remain the same for 2021—6.2% on employees and 12.4% on the 
self-employed.
It now takes $1,470 to earn a single Social Security credit, up $60 from 2020.
1. Beneficiaries Received a 1.3% Increase
For 2021, nearly 70 million Social Security recipients are seeing a 1.3% cost of living adjustment
(COLA) to their monthly benefits.1 The adjustment helps benefits keep pace with inflation and is 
based on the Consumer price index for Urban Wage Earners and Clerical Workers(CPE-W) as 
calculated by the Bureau of Labor Statistics (BLS). If the CPI-W increases more than 0.1% 
year-over-year between the third quarter of the previous year and the third quarter of the current
 year, Social Security will raise benefits by the same amount.
The 1.3% bump for 2021 compares with the previous year's (2020) 1.6% COLA. In 2019, the 
COLA was 2.8%, the largest increase since 2012. For the average Social Security recipient, 
the 1.3% raise amounts to just $20 per month on an average monthly payout of $1,543 vs. $1,523
 in 2020.
2. Maximum Taxable Earnings Rose to $142,800
In 2020, employees were required to pay a 6.2% Social Security Tax (with their employer matching 
that payment) on income of up to $137,700. Any earnings above that amount were not subject to 
the tax. In 2021, the tax rate remains the same at 6.2% (12.4% for the self-employed), but the 
income cap has increased to $142,800.
The flip side is that as the taxable maximum income increases, so does the maximum amount of
 earnings used by the SSA to calculate retirement benefits. In 2020, the maximum monthly Social 
Security benefit for a worker retiring at full retirement age was $3,011. In 2021, the maximum 
benefit increases by $137 per month to $3,148.

Social Security recipients can receive a 32% larger payment each month if they claim benefits at 
age 70 rather than at their regular full retirement age.
3. Full Retirement Age Continues to Rise
The absolute earliest you can start claiming Social Security retirement benefits is age 62. However,
 claiming before your full (or normal) retirement age will result in the payout being permanently 
reduced. For those who turned 62 in 2020, the full retirement age was 66 and eight months.
Under current law, retirement age for Social Security purposes is set to increase by two months
 each year until it hits 67. If you turn 62 in 2021, your full retirement age is 66 and 10 months. Unless
 the law changes, anyone born in 1960 or later will not reach full retirement age until they are 67.
If you delay collecting Social Security past your full retirement age, you can collect more than your 
full, or normal, payout. In fact, if you put off claiming until age 70, you will receive up to a 32% higher annual payout than if you started receiving benefits at full retirement. After age 70, there is no further
incentive for delaying.
4. Earnings Limits for Recipients Were Increased
If you work while collecting Social Security benefits, all or part of your benefits may be temporarily
 withheld, depending on how much you earn. However, those income limits have increased slightly 
for 2021.
Prior to reaching full retirement age, you will be able to earn up to $18,960 in 2021. After that, $1 will 
be deducted from your payment for every $2 that exceeds the limit. The 2021 annual limit represents a 
$720 increase over the 2020 limit of $18,240.
If you reach full retirement age in 2021, you will be able to earn $50,520, up $1,920 from the 2020 
annual limit of $48,600. For every $3 you earn over the 2021 limit, your Social Security benefits will 
be reduced by $1, but that will only apply to money earned in the months prior to hitting full
 retirement age. Once you reach full retirement age, no benefits will be withheld if you continue
 working.
5. Social Security Disability Benefits Increased
Social Security Disability Insurance (SSDI) is an insurance program in which workers can earn 
coverage for benefits by paying Social Security taxes through their paycheck. The program provides income for those who can no longer work due to a disability to help replace some of their lost income. Payments increased slightly in 2020 for the nearly 10 million Americans who receive Social Security disability benefits.
Disabled workers will receive, on average, $1,277 per month in 2021, which is up from $1,261 in 
2020. However, for a disabled worker, a spouse with one or more children, they’ll be paid on average $2,224 per month, which is an increase of $29 from 2020.
6. Credit Earning Threshold Goes Up
If you were born in 1929 or later, you must earn at least 40 credits (maximum of four per year) over
 your working life to qualify for Social Security benefits. The amount it takes to earn a single credit 
goes up slightly each year. For 2021, it will take $1,470 in earnings per credit, up $60 from 2020. 
The number of credits needed for disability depends on your age when you become disabled.
Looking Ahead to 2035
According to the most recent Social Security and Medicare Boards of Trustees annual report, both 
trust funds will be depleted as of 2035. If these predictions hold, beginning in 2035, beneficiaries 
will receive about three-quarters (75%) of their scheduled benefit until at least 2093. The report 
concludes by tasking lawmakers with enacting legislation to address these financial challenges 
"sooner rather than later."
Every October, the Social Security Administration (SSA) announces its annual changes to the 
Social Security program for the coming year. Here are the Social Security changes that were 
announced in Oct. 2020 to take effect on Jan. 1, 2021, according to the SSA annual fact sheet.
 Keep them in mind when you update your Social Security information.
KEY TAKEAWAYS
Social Security recipients got a 1.3% raise for 2021, compared with the 1.6% hike beneficiaries 
received in 2020.
Maximum earnings subject to the Social Security tax also increased—from $137,700 a year to
 $142,800.
Other changes for 2021 included an increase in how much money working Social Security recipients can earn before their benefits are reduced and a slight rise in disability benefits.
Social Security tax rates remain the same for 2021—6.2% on employees and 12.4% on the 
self-employed.
It now takes $1,470 to earn a single Social Security credit, up $60 from 2020.
1. Beneficiaries Received a 1.3% Increase
For 2021, nearly 70 million Social Security recipients are seeing a 1.3% cost of living adjustment
(COLA) to their monthly benefits.1 The adjustment helps benefits keep pace with inflation and is 
based on the Consumer price index for Urban Wage Earners and Clerical Workers(CPE-W) as
 calculated by the Bureau of Labor Statistics (BLS). If the CPI-W increases more than 0.1%
 year-over-year between the third quarter of the previous year and the third quarter of the current 
year, Social Security will raise benefits by the same amount.
The 1.3% bump for 2021 compares with the previous year's (2020) 1.6% COLA. In 2019, the COLA 
was 2.8%, the largest increase since 2012.3 For the average Social Security recipient, the 1.3%
 raise amounts to just $20 per month on an average monthly payout of $1,543 vs. $1,523 in 2020.
2. Maximum Taxable Earnings Rose to $142,800
In 2020, employees were required to pay a 6.2% Social Security Tax (with their employer matching
 that payment) on income of up to $137,700. Any earnings above that amount were not subject to the 
tax.
In 2021, the tax rate remains the same at 6.2% (12.4% for the self-employed), but the income cap
 has increased to $142,800.
The flip side is that as the taxable maximum income increases, so does the maximum amount of 
earnings used by the SSA to calculate retirement benefits. In 2020, the maximum monthly Social 
Security benefit for a worker retiring at full retirement age was $3,011. In 2021, the maximum
 benefit increases by $137 per month to $3,148.4

Social Security recipients can receive a 32% larger payment each month if they claim benefits at 
age 70 rather than at their regular full retirement age.

3. Full Retirement Age Continues to Rise
The absolute earliest you can start claiming Social Security retirement benefits is age 62. However,
 claiming before your full (or normal) retirement age will result in the payout being permanently
 reduced. For those who turned 62 in 2020, the full retirement age was 66 and eight months.
Under current law, retirement age for Social Security purposes is set to increase by two months 
each year until it hits 67. If you turn 62 in 2021, your full retirement age is 66 and 10 months. Unless 
the law changes, anyone born in 1960 or later will not reach full retirement age until they are 67.
If you delay collecting Social Security past your full retirement age, you can collect more than your
 full, or normal, payout. In fact, if you put off claiming until age 70, you will receive up to a 32% higher annual payout than if you started receiving benefits at full retirement. After age 70, there is no further 
incentive