Social Security Will See A 1.3% Increase Next Year

Matty-Sways

The cost-of-living adjustment translates into a $20 boost in retirees’ average monthly benefits.

The Social Security agency each year increases or decreases the cost-of-living adjustment based on the Labor Department’s consumer-price index for urban wage earners and clerical workers, or CPI-W, a measure of inflation that is slightly different from the more commonly cited overall consumer-price index, or CPI. The agency will make adjustments based on the previous quarters movement, in this instance 1.3%.

AARP Chief Executive Jo Ann Jenkins called the cost-of-living adjustment “modest,” but said the increase was crucial given the coronavirus pandemic’s health and economic consequences.

Medicare’s trustees in April projected the standard 2021 monthly premium for Medicare Part B (covers doctor visits and other types of outpatient care) would increase to $153.30 from $144.60 this year (increased by $9.10 in 2020). Congress, as part of a short-term government funding deal passed in September, included a measure to limit increases in Medicare Part B premiums next year.

The administration also said the maximum amount of earnings subject to the Social Security tax will increase to $142,800 in 2021 from $137,700 this year, a 3.7% increase.

The broader CPI increased a seasonally adjusted 0.2% in September compared with the prior month( about what was expected). September’s rise in prices was the 4th in a row, but at a slower rate than in June, July and August. Prices for used vehicles were up 6.7% last month, prices for dining out rose 0.6%, while grocery prices fell, leaving overall food prices unchanged. Fuel oil prices were down sharply, by 5.3%. On a non-seasonally adjusted basis, the overall consumer-price index rose 1.4% in September from a year earlier and core prices increased 1.7% over the year. stem the spread of the virus.

“The trend is subdued and overall price pressures remain contained,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics, in a note to clients.

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