On Oct. 13, 2020, the Social Security Administration officially announced that Social Security recipients will receive a 1.3% cost-of-living adjustment for 2021. 

This adjustment will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2021. Additionally, increased payments to more than 8 million Supplemental Security Income beneficiaries will begin on Dec. 31, 2020.

Is this a COLA lite? Many may be disappointed by this modest bump compared to the 1.6% increase beneficiaries saw in 2020 or the 2.8% boost in 2019. However, it’s important to remember that the Social Security Act ties the annual COLA to the increase in the Consumer Price Index. 

In broad terms, the CPI measures the price of consumer goods and how they're trending in to evaluate the economy. In short, lower inflation numbers usually equals a modest COLA.

How You Will Be Notified. According to the Social Security Administration, Social Security and SSI beneficiaries are usually notified by mail starting in early December about their new benefit amount. 

However, if you’ve set up your SSA online account, you will also be able to view your COLA notice online through your “My Social Security” account.

What are your next steps? If this increase surprises or concerns you, it's always a good idea to seek guidance from your financial professional about changes to any of your sources of retirement income.

This information should not be construed by any client or prospective client as the rendering of personalized investment advice. All investments and investment strategies have the potential for profit or loss, and there can be no assurance that the future performance of any specific investment or investment strategy including those discussed in this material will be profitable or equal any historical performance levels. Investment strategies such as asset allocation, diversification, or rebalancing do not assure or guarantee better performance and cannot eliminate the risk of investment losses. Any target referenced is not a prediction or projection of actual investment results and there can be no assurance that any target will be achieved. Kent Patrick is with Bush Wealth Management.