This Social Security rule should have the rich jumping for joy in 2021

For the more than 64 million people currently receiving a Social Security benefit, we've entered the most important time of the year. That's because the next couple of months will determine how much of a "raise," if any, beneficiaries will receive in 2021.


Since 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has served as Social Security's inflationary tether. The CPI-W measures the changes in price for a large basket of goods and services.

To determine Social Security's annual cost-of-living adjustment (COLA), only readings from the third quarter (July through September) are considered. Thus, the average CPI-W reading from the third quarter of the current year is compared to the average CPI-W reading from the third quarter of the previous year. If this figure has risen from one year to the next (signifying inflation), Social Security's beneficiaries will be getting a raise that's commensurate with the percentage increase and rounded to the nearest tenth of a percent.

In 42 of the past 45 years, Social Security beneficiaries have received a "raise" to help them keep up with inflation.