January 20, 2021

Social Security Changes in 2021

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Every year Social Security announces changes to benefit amounts, earnings offsets, maximum taxable earnings, tax rates, and full retirement age. These changes take effect on January 1 of each year.


A little bit more always helps.
To help keep pace with inflation, almost 70 million Social Security recipients got a 1.3% benefit increase. The maximum monthly retirement benefit is $3,148, up from $3,011 in 2020.


Good news on tax rate.
The FICA tax rate has not changed and remains at 6.20% for employees and 12.40% for self-employed individuals. The rate for Medicare is 1.45% on all earnings. Using modified adjusted gross income from the 2020 tax return, individuals above $200,000 and couples filing jointly above $250,000 pay an additional 0.9%.


A boost to earnings.
The maximum earnings subject to the FICA tax increased $5,500 from $137,700 to $142,800. The amount a recipient can earn without a reduction in benefits prior to reaching full retirement age has increased from $18,240 to $18,960. One dollar of benefits is withheld for every $2 earned above the limit. In the year in which an individual reaches full retirement age, the maximum earnings is $50,520. This only applies to earnings in the months prior to reaching full retirement age.


Full retirement age rises.
For anyone turning 62 this year, the earliest age to claim benefits, the full retirement age has increased by two months to 66 and 10 months. The full retirement age increases gradually until it reaches 67.


Check your Social Security account.
Everyone currently receiving or considering applying for Social Security benefits should establish an account on the Social Security website. https://www.ssa.gov/myaccount/

If you have questions about
these changes, call or email today.

BROUGHT TO YOU BY:

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Donna M. Feder, CPA
Partner/ Woodland Hills
DK Wealth Management LLC
21600 Oxnard Street, Suite 2000
Woodland Hills, CA 91367

Tel 818-385-0585
donna@dkllpcpa.com

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Thane F. Kelton, CPA
Partner/San Diego
DK Wealth Management LLC
4225 Executive Square, Suite 900
La Jolla, CA 92037-1485

Tel 858-642-5050
thane@dkllpcpa.com

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Kristopher Lindley, CFP®
Financial Consultant
DK Wealth Management LLC
12555 High Bluff Drive, Suite 210
San Diego, CA 92130

Tel 619-550-4619
Kristopher.Lindley@LPL.com

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