Here Is the Social Security COLA for 2021

Elizabeth O'Brien is a senior writer at Money

Savvy Money readers know that compound interest is a powerful multiplier that happens when you earn interest on your interest. But compounding works in the opposite direction, too. Shortfalls can compound, and that’s what’s happened over the years with the Social Security cost-of-living increase. The annual raise that older adults get to their Social Security checks hasn’t kept pace with inflation. Health care costs in particular have risen at a steep rate of around 5% a year, consuming an ever-greater share of retirees’ Social Security checks. This morning, the Social Security Administration announced the cost-of-living adjustment for 2021. Learn more about it in today’s edition.

Best wishes,
Elizabeth

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TIMELY RETIREMENT NEWS, INSIGHTS, AND ADVICE

Seniors to Get a 1.3% Raise Next Year

The Social Security Administration just announced the COLA for 2021.

Prime Day, Black Friday or Cyber Monday: When Will Internet Shoppers Find the Best Deals?

The holiday shopping season has (unofficially) begun.

If You Got an Extension on Filing Your 2019 Taxes, the Deadline Is Here

The pandemic didn’t delay this one.

RETIRE WITH MONEY COMMUNITY INSIGHTS

This week in our Retire with Money Facebook group, a member raised a question of perennial interest: “I have a small pension from an old job. It currently has about $26,500. Do I take a lump sum and pay off debts (credit cards and loans), take the monthly payments of $126, or put it into something else?” For context, the poster is currently retired, receiving Social Security, and hadn’t yet touched her 401(k) or 403(b).

We tackled this question a number of years ago. There’s no one-size-fits all answer. Women tend to outlive men, so the standard advice is often to take the annuity. But there are some circumstances here that may indicate the opposite move: the annuity is small, and there’s credit card debt in the picture. One member had this from personal experience: “I had a tiny pension, about the size of yours when I was 65. I contacted the company and learned that if I left it for later, it would grow. I checked back each year to ensure the payout amount was still growing and eventually took it at 69.5.” Smart tip!

HOW TO INVEST TAX-EFFICIENTLY

Evaluating your investments through a tax lens can improve your after-tax returns. Tax-smart investing techniques, such as tax-loss harvesting, monitoring holding periods, and investing in municipal securities, may help you defer near-term taxes or reduce your tax bill so that your money can stay invested and has the potential to grow. Morningstar estimates that a hypothetical investor who did not employ a tax-smart strategy gave up an average of 1% to 2% of return per year to federal income taxes for the 93 years from 1926 to 2018. Click below to learn about 3 tax-smart saving techniques.

Learn 3 tax-smart techniques

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Morningstar and Fidelity Investments are independent entities and are not legally affiliated.
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RETIREMENT NEWS FROM AROUND THE WEB

Where Fall Colors Are Hitting Their Peak, in One Map

This cool interactive map from SmokyMountains.com gives you a day-by-day rundown. VOX

How to Tell If Socializing Indoors Is Safe

As the cold weather approaches in much of the country, here are some factors to consider when weighing the risk of indoor gatherings. THE ATLANTIC

COVID-19 Devastated Nursing Homes — Here Are Safer, More Cost-Effective Options

Innovative alternatives have sprung up in recent years, but they haven’t gotten widespread traction yet. MARKETWATCH

Did You Get a New Disclosure Form From Your Financial Advisor?

The new Form CRS is intended to provide investors with easy-to-understand information about things such as an advisory firm’s fee structure. CNBC

Elizabeth O'Brien is deputy editor at Money. She has covered retirement and health care for nearly a decade. A Brooklyn resident and mom of two boys, she navigates the alphabet soup of Medicare and the New York City subway system with equal ease. You can email her at elizabeth.obrien@money.com and follow her on Twitter at @elizobrien.

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Here Is the Social Security COLA for 2021

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