Nearly 70 million Americans receive Social Security benefits, and for many, it is a significant portion of their retirement income.  This vital program is dynamic, and in early October 2020 the Social Security Administration (SSA) announced important changes effective January 1, 2021.

Here is a look at what is new and different for our nation’s top social program:


Full Retirement Age

The Full Retirement Age (FRA) will be 66 years and 10 months in 2021. Starting in 2022 it will be 67 years for anyone born in 1960 and after. A person can file for benefits sooner than their FRA, as young as 62, but their benefits will be reduced.

Benefits Increase

Next year, recipients of Social Security will see their benefits increase by 1.3%. This annual Cost of Living adjustment is made based on changes of the Consumer Price Index for Urban Wage Earners and Clerical Workers index (CPI-W) between the 3rd quarter of the prior year to the 3rd quarter of the current year and is effective in January 2021. The increase in 2020 was 1.6%.

Maximum Taxable Earnings 

Social Security Tax Rate of 6.2% (12.4% for self-employed) will be applied only to the first $142,800 of gross earnings. That is an increase of $4,500 over the 2020 limit.

Maximum Social Security Benefit

Just like the amount of income taxable for Social Security purposes has a limit, so does the maximum benefit. This limit will increase to $3,148 per month, which is $137 more than in 2020.

Social Security Disability Thresholds

Social Security Disability Thresholds will increase to $1,310 per month ($1,260 in 2020) for non-blind persons, to $2,190 per month for blind persons (previously $2,110 in 2020) and $940 for Trial Work Period recipients ($910 in 2020).

Minimum Earnings to Qualify for Credit

To receive Social Security benefits, an individual must earn a minimum of 40 credits during their lifetime. Credits are awarded on a quarterly basis, so a person can receive a maximum of 4 credits per year. And to receive a quarterly credit in 2021 a worker must earn at least $1,470 in each calendar quarter – an increase of $60 over the 2020 limit.

Retirement Earnings Test

For those who claim their Social Security benefits before their FRA and continue working, there is a threshold amount above which their benefits will be withheld. A person earning more than $18,960 in 2021 (18,240 in 2020) will have $1 of their benefits withheld for every $2 earned above this limit by the Social Security Administration. It is worth noting that the benefits are not lost but rather postponed and will result in a higher benefit amount once the FRA is reached.

We recommend that our clients go to the Social Security Administration website,, and create a personal account. There they will be able to estimate their future benefits, manage their current benefits, and much more.  For any questions or more information needed, feel free to reach out to your Sax Advisor for guidance.


About the Author

Paul Cheransky, CFP® is an Associate Wealth Advisor at Sax Wealth Advisors with over 20 years of experience in portfolio accounting for ultra-high net worth families, investment management, investment planning, trading and operations.  He can be reached at