Critter Corner: What is the Social Security Cost of Living Adjustment for 2021?

Dear Oakley,

What is the Social Security Cost of Living Adjustment for 2021, and how is COLA calculated?

Thanks so much!

Maura Monney

Dear Maura,

The Social Security Administration announced this week that the cost-of-living adjustment (COLA) for benefits in 2021 will be 1.3%. For the average retirement benefit, that amounts to just a $20 increase per month for a single person, increasing the average monthly check from $1,523 to $1,543. The average married couple’s increase will be $33 monthly, raising the average monthly checks to $2,596. The COLA increase also means that the maximum earnings subject to Social Security tax will increase from $137,700 to $142,800.

The COLA affects the personal finances of about 1 in 5 Americans, including Social Security recipients, disabled veterans, and federal retirees. That’s about 70 million people in all. Despite the economic fallout from COVID-19, the 1.3% raise for 2021 is the second lowest increase in the program’s history.

How is a COLA calculated?

According to the formula, COLAs are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). CPI-Ws are calculated on a monthly basis by the Bureau of Labor Statistics.

The annual COLA is intended to keep seniors’ buying power level with inflation, but according to The Senior Citizens League, seniors’ expenses have greatly surpassed COLA. For instance, prescription drug and Medicare Part B costs have more than tripled since 2000, and homeowner’s insurance has increased 174% and COLA just isn’t keeping up.

Two Congressmen Propose a Bill to Raise COLA for 2021

Two Congressional Democrats — Representatives Peter DeFazio, (D-Oregon) and John Larson, D-Connecticut) — plan to propose a bill to raise that to a 3% emergency increase next year. They will be introducing a bill, currently titled the Emergency Social Security COLA for 2021 Act, today. Separately, both lawmakers are also advocating for changing the measurement used to calculate the annual increases.

“Due to the Covid-19 pandemic, seniors are facing additional financial burdens in order to stay safe,” DeFazio said in a statement. “This absolutely anemic COLA won’t even come close to helping them afford even their everyday expenses, let alone those exacerbated by Covid-19.” Perhaps, they will enact an emergency increase next year!

Hope this is helpful,


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About Renee Eder

Renee Eder is the Director of Public Relations for the Farr Law Firm, and gives the voice to the Critters of Critter Corner. Renee’s poodle, Penny, is an official comfort dog who she and her children bring to visit with seniors who are in the early stages of dementia at a local senior home once a month.