Social Security Cost of Living Adjustment [COLA] for 2021

School of Social Security & Medicare

2021 Social Security Cost of Living Allowance [COLA] Update. Meld University Logo on top of a pen, paper with budget figures, and a calculator

In their latest Cost of Living Adjustment [COLA], the Social Security Administration announced that both Social Security and Supplemental Security Income [SSI] beneficiaries will see a 1.3% increase to their monthly checks for 2021.

Senior Citizens League Speaks Out for Larger Increase

The 1.3% increase is a slight dip from last year’s 1.6% increase, but it is in-line with the 10-year average of 1.4%. However, the average from 2010 through 2020 is below the previous 10-year average.

This has the Senior Citizens League, a nonpartisan advocacy group for older Americans, lobbying congress for an emergency COLA increase to aid beneficiaries in 2021. The group argues that the current increase does not account for other rising costs seniors face, including prescription drugs, food and housing. They claim the 10-year COLA average, coupled with increasing Medicare premiums, is making it more difficult for the elderly to allocate their finances.

A House Bill called “Guaranteed 3 Percent COLA for Seniors Act of 2019” was introduced last year, but it hasn’t moved past committee. Several other initiatives are being discussed that could increase the COLA for 2021 or beyond.

COLA Calculation

The COLA is calculated by using the consumer price index for urban wage earners or clerical workers [CPI-W]. CPI-W is calculated by the Bureau of Labor Statistics each month.

The perceived problem with this index, for those receiving social security, is that it focuses more on working adults that are not yet at Social Security age. This means the adjustments are being made based on the expenses of a group that could have very different needs and spending patterns from those receiving Social Security benefits.

Timing for COLA Announcements and Increases

The more than 64 million Social Security beneficiaries will see the COLA increase in January 2021. The 8 million plus SSI beneficiaries, on the other hand, will see payment increased slightly earlier, starting on December 31, 2020.

In December, Social Security beneficiaries will receive a letter informing them of their new benefit amount. They can also access this information through their Social Security account. Beneficiaries can do their own math by logging into their account and bringing up their benefit verification letter. This letter shows the gross amount of their benefit before deductions. The estimated increase for average retiree comes to approximately $20 a month, taking them from $1,523 up to $1,543.

Medicare Part B Yet to Announce Changes

There has yet to be an announcement for the Medicare Part B premiums. Those premiums are often deducted from Social Security benefit checks. Fortunately, Congressional Legislation has put a cap on the increase, meaning COLA should cover the rise in Medicare B, preventing a hold-harmless situation. Unfortunately, any Medicare B premium increases will still eat into their COLA.

If you have more questions about Social Security planning or benefits, reach out to our team here at Meld Financial, or visit the School of Social Security & Medicare tab at Meld University.


Working with Meld Financial can help to alleviate many of the stresses related to your Social Security, Medicare and retirement planning. If you are looking for help planning, saving and investing for retirement, contact us.

Our team of wealth managers consists of financial, legal and tax professionals who will help you develop your FINANCIAL FINGERPRINT™. Then you can be confident that you are on the road to a successful retirement.

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