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More than 64 million Americans will see the increase in their payments beginning in January.

The Social Security Administration has announced a cost of living adjustment (COLA) to recipients’ monthly Social Security and Supplemental Security Income (SSI) benefits. More than 64 million Americans will see the 1.3% increase in their payments beginning in January of 2021.

The increase – slightly lower than last year’s 1.6% adjustment – is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers and was put in place to ensure the purchasing power of these benefits isn’t eroded by inflation.

According to the Social Security Administration, on average, retired workers currently collect $1,523 per month in Social Security payments, or roughly $18,276 per year. The 1.6% COLA will add about $20 per month to those payments, or $240 for the year.

Keep in mind, all federal benefits must be direct deposited. So if you haven’t already started receiving benefits, you need to establish electronic transfers to your bank or financial institution. Contact your financial advisor for more information.

Source: Social Security Administration