2021 Social Security COLA Announced! with Bonus Calculation Tutorial

Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 72 million Americans will increase 1.3 percent in 2021.

The 1.3 percent cost-of-living adjustment (COLA) will begin with benefits payable to nearly 64 million Social Security beneficiaries in January 2021. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2020. (Note: over 3 million people receive both Social Security and SSI benefits).

Click HERE for the announcement from SSA

Medicare Information

Information about Medicare changes for 2021, when announced, will be available at www.Medicare.gov.

Below is an excerpt from the Costello Compliance online on-demand course series, Qualifying Households for Affordable Housing. For a catalog of Costello University training courses see HERE.

COLA Calculation Tutorial

Important points:

  • Social Security verifications received so far in 2020 will not reflect the 2021 COLA.

  • Income certifications that include social security income in 2020 but that had income verified prior to the COLA announcement will need to include the COLA by doing an extra calculation.

Example #1

A social security recipient is anticipated to move into an affordable housing unit on November 1, 2020. In September, it was verified that she had 2020 monthly social security benefit income of $931. The 1.3% COLA was announced on October 13, 2020.

Annual Income Calculation:

Step 1: Calculate 2020 income.

$931 x 2 = $1,862 (income for November and December 2020)

Step 2: Calculate the 2021 monthly income with COLA.

$931 x 1.013 = $943.103 (2021 monthly benefit)

(Note: multiplying a number by 1.013 is the mathematical equivalent of adding 1.3%)

Step 3: Calculate total 2021 income.

$943.103 x 10 = $ 9,431.03 (income for January-October 2021)

Step 4: Add 2020 and 2021 benefit income

$1,862 + $ 9,431.03 = $11,293.03 annual benefit income

Example #2

A SSI recipient is anticipated to move into an affordable housing unit on January 1, 2021. When his income is being verified, he brings in the benefit letter that he received in October 2020 that informed of the 1.3% COLA for 2021. The monthly SSI benefit listed on the letter is $750.

Annual Income Calculation:

No calculation is necessary, as the COLA is already included in the letter.

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