How the 2021 Social Security Raise Affects Disability Benefits

Every September, the federal government reviews the average cost of living as well as current inflation rates. This data determines whether they’ll approve an annual Cost-of-Living-Adjustment (COLA) increase by mid-October. Despite the U.S. economy contracting sharply due to the ongoing global pandemic, we have good news! Thanks to an average annualized GDP growth of 1%, there will be a Social Security raise coming in 2021. Learn the 2021 COLA increase amount, how it affects various federal benefits and when raises begin below.

2021 Social Security Raise Impacts Both Retirees and Disability Recipients

So, how much of a Social Security raise can people expect, and when will the larger payments go into effect? It all depends on which benefits you receive right now (or applied for and may still get):

• SSI (Supplemental Security Income) – the Social Security raise for 2021 adds another $12/month for individuals, and $16/couple. Starting on December 31, 2020, the max SSI payment rises to $794/month for individuals, and $1,191/month per couple.
• SSDI (Social Security Disability Insurance) – the Social Security raise for 2021 adds about $16/month, on average, to SSDI payments nationwide. Starting January 2021, the average SSDI payment to disabled workers will increase from $1,261 to $1,277 per month.
• Regular retirement benefits – If you’re drawing early or regular retirement each month, the Social Security raise for 2021 is 1.3%. That Social Security raise equals about $20 more each month, increasing the average payment to retirees from $1,523 to $1,543.

Find the date your Social Security raise goes into effect on the SSA’s payment schedule for 2021.

Factors That Affect Your Maximum Social Security Benefit Amount

Interestingly, the maximum Social Security benefit under current federal law jumps to $3,148/month. Since the 2021 Social Security raise equally affects SSDI and retirement benefits, you might wonder who qualifies for that amount. There are two factors that determine your Social Security payment:

• Age – waiting until your full retirement age (FRA) to apply helps maximize your benefits. Start drawing early at 62, and your Social Security payments will be up to 30% lower for life.  
• Average monthly wages – how much money you earn over a 35-year work history determines your Social Security benefit amount. That’s true regardless of whether you receive SSDI or regular retirement each month from Social Security. Most Americans can expect about 40% of their average monthly paycheck earned while working in Social Security benefits. How much would you need to earn to qualify for $3,148/month under the 2021 Social Security raise? Your annual salary must be $135,000 or higher for a minimum of 10 years before you became disabled or retired.  

If your health forces you to stop working before your FRA, there’s one simple way to maximize your Social Security. Apply for Social Security disability instead of early retirement. Here’s an example: Let’s say your FRA is 67. But at 62, you suffer a stroke and cannot work any longer to support yourself. Your monthly benefit after the 2021 Social Security raise at age 67 should be $2,000/month. Apply for early retirement at 62, and you’ll get $1,400/month instead for life. If the Social Security Administration approves your SSDI application at age 62, you’ll get the full $2,000/month for life instead!

How Much Does the 2021 COLA Offset Rising Medicare Costs?

Once you receive SSDI payments for 24 months in a row, you also qualify for Medicare coverage. In fact, it’s the only way to qualify for Medicare before you turn 65 years old. That’s another good reason to apply for SSDI instead of early retirement if you’re closer to 60 than 67). But how much does the 2021 Social Security raise impact people’s monthly Medicare premiums? Here’s how those costs break down:

• Medicare Part B premiums are set to rise $3.90 in 2021, totaling $148.50/month. That takes up about one-fifth of the average Social Security raise in benefits you can expect this next year.
• Deductibles for Medicare Part B will go up $5, totaling $203 for the entire year. That eats up another one-quarter of the Social Security raise going into effect in January 2021.

You May Qualify for Legal Assistance

Considering applying for Social Security disability? Having a lawyer file your claim makes you 3x more likely to win benefits. Those who qualify for legal assistance through this website typically receive $12,000 in lump-sum backpay as well as monthly benefits. Apply on your own without a lawyer, and you’ll usually wait at least 18-24 months for your first disability payment. In addition, the SSA approves less than 1 in every 4 disability applicants every year.

All disability lawyers work on contingency. That means if the SSA won’t approve your disability application, you owe $0 for legal assistance. But if you do win, you’ll only pay a small, one-time fee.

Ready to see if you may qualify? Click the button below to start your free online benefits evaluation now!

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