Come January 2021, the roughly 70 million people who receive Social Security will see a 1.3% increase in their benefit payments to account for the rising cost of living, the Social Security Administration announced Tuesday.
That means the average monthly check for retirees will increase by $20 to $1,543, the agency said. However, the extra $20 a month for many seniors on low fixed incomes may not go as far they need, given the rising cost of groceries and other expenses as a result of the pandemic.
Meanwhile, the average monthly check for those receiving Social Security disability benefits will rise by $16 to $1,277.
The maximum Social Security check retirees can receive every month -- if they start collecting benefits at their full retirement age -- will go up by $137 to $3,148. The retirement age is now 67 for those born in 1960 or later.
The agency also announced new taxable income thresholds on which American workers will owe the 6.2% Social Security payroll tax.
Starting next year, the first $142,800 of one's wages will be subject to that tax, up from $137,700 currently.
For those who are self-employed, they would owe 12.4% in payroll taxes up to that amount because they would owe both the employee (6.2%) and the employer (6.2%) portions of the payroll tax. But they will get to deduct the employer portion on their federal income taxes.