Potential Social Security Changes Disability Recipients Can Expect in 2021

social security cards

Social Security makes up over half of the annual income for 62% of retirees, and Social Security disability benefits provide crucial relief for 8.5 million disabled workers and 1.6 million of their loved ones. It’s a vital part of keeping millions of Americans out of poverty and in their homes.

However, COVID-19 and the tumultuous economy of 2020 has made it difficult to predict how Social Security will change in 2021. There are a few indications that we’ll see changes that could benefit workers, and a few changes that might make things harder for retirees or people on disability.

Here’s what some financial experts say to expect:

Slight Rise in the Retirement Age

This won’t affect most SSD recipients, but if you were expecting to receive retirement benefits within the next few years, you may have to wait a little longer. The official retirement age will rise by 2 months to 66 years and 10 months in 2021. It will apply to people born in 1959 or later.

Possibly No COLA Benefit Increase in 2021

In most years, recipients of Social Security disability benefits could expect an increase in benefits thanks to cost-of-living adjustments (COLA). COLAs ensure that Social Security benefits keep their buying power as costs inflate, but they’re not guaranteed. The pandemic has led to a decrease in spending, which might lead to a fall in prices, which is how COLAs are calculated by the Social Security Administration.

Falling prices due to economic slowdown most likely means no COLA. The good news is that benefits can’t go down; they can only stay level. Whether or not there’s a COLA adjustment in 2020 will determine a number of other changes as well.

Possibly No Threshold Increase for Early Filers

If someone files for Social Security retirement benefits early, they’re subject to the “retirement earnings” test, which withholds benefits for every dollar they make above a certain amount. For instance, people who won’t reach retirement age next year will have their Social Security benefits reduced by $1 for every $2 they earn above $1,520 every month.

In years where there is a COLA adjustment, this threshold rises (which means early filers get more benefits and less withholding). However, if there’s no COLA, beneficiaries can expect their retirement earning threshold to stay the same.

Work Credits Might Be Harder to Earn

To receive any Social Security benefits, retirement or disability, workers must earn 40 work credits in their lifetime. This roughly amounts to about 10 years of work. You can only earn 4 work credits annually, and you earn 1 work credit per $1,410 of income. You only need to earn $5,640 a year to earn your maximum work credits for the year, so earning work credits is fairly attainable for most working people.

The amount of income required to earn a work credit normally rises every year, and this year appears to be no exception. The problem, of course, is that with unemployment due to COVID-19, there’s a chance that many people will have difficulty earning maximum work credits in 2021.

If you have questions about your Social Security disability claim, speak with our Pennsylvania SSD attorneys in a free consultation! Let’s discuss your options.

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