The Social Security Administration (SSA) announced an increase in Social Security Disability benefits for 2021. With this announcement, they note that the increase applies to both the Social Security Disability Insurance (SSDI) and the Supplemental Security Income (SSI) programs.
Why Are Benefits Increasing?
Federal law requires the SSA to evaluate benefits each year and make adjustments. This is known as a cost-of-living-adjustment (or COLA for short). COLA is connected to inflation as measured by the Consumer Price Index.
The Consumer Price Index is a calculation by the U.S. Department of Labor’s Bureau of Labor Statistics. It measures average changes in the prices of certain consumer goods and services. For example, if prices increase due to inflation, the Consumer Price Index also increases.
Next, federal law calls for rules that require SSA to adjust disability and other Social Security benefits upward accordingly.
The History Of COLA
According to Social Security’s website,
“Congress enacted the COLA provision as part of the 1972 Social Security Amendments, and automatic annual COLAs began in 1975. Before that, Congress enacted special legislation to increase benefits.
Beginning in 1975, Social Security started automatic annual cost-of-living allowances. The change occurred due to legislation that ties COLAs to the annual increase in the Consumer Price Index (CPI-W). The change means that inflation no longer drains value from Social Security benefits.”
What Is The Increase For 2021?
The Social Security Administration recently announced that benefits will increase by 1.3% in 2021. The higher payments will begin as of December 31, 2020. This is a slight decrease from last year when benefits increased by 1.6%.
Individuals receiving SSI or SSDI are typically notified of the increase by mail in early December. If you don’t receive anything in the mail, you can access the notice via the Message Center on your online Social Security Account.
Below, you can see a chart outlining the historic COLA increases since 1975.