facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast blog external search brokercheck brokercheck
%POST_TITLE% Thumbnail

2021 by the Numbers

Managing Your Finances

Most of the new "numbers" are out from the IRS and others concerning 2021. If you're going to effectively plan, you need to know them. So, here are a few.

Retirement Plans

Let's start with what you can do.

  • Deferrals to employer plans (401(k), 403(b), TSP) are unchanged at $19,500
  • Catch up contributions (for those over age 50) are also unchanged at $6,500
  • IRA limits remain unchanged
  • Adjusted Gross Income (AGI) limit for contributions to Roth IRAs (or deductible Traditional IRA contributions when spouse is covered by a retirement plan at work) is increased to $208,000 for married couples filing jointly. Phase out begins at $198,000. For singles and Head of Household the phase out range is $125,000 - $140,000
  • Limit for all contributions to a defined contribution plan increases to $58,000 from $57,000

Social Security

The amount of income subject to Social Security tax, increases to $142,800. If you were over the limit in 2020 and will be over the limit in 2021 you'll pay an additional $316 in Social Security tax in 2021. You'll continue to pay Medicare Tax on all earned income and if your income exceeds $250,000 for a married couple or $200,000 for a single taxpayer, you may be subject to additional Medicare Surtaxes.

Cost of Living Adjustments

Those receiving Social Security will see a 1.3% increase in benefits. Medicare rates have not been set for 2021 yet, but it is certainly possible that increases could exceed the Social Security increase. For those paying the lowest Medicare premiums, your net Social Security benefit will not go down.

Military retirement will go up by the same amount as will VA Disability Compensation. If your retired in 2020, you won't see the full COLA increase.

Those covered by the Federal Employee Retirement System (FERS) will also see a 1.3% increase. FERS increases don't always equal the Social Security increase. This is normally the case if the COLA is greater than 2%.


If you found this article useful, you might like the following blog posts:

Retired Military Finances 101: How to Estimate Your Future Social Security Benefits


Potential Retirement Surprise Waiting for Some Military Spouses: GPO


Another "Round" of Social Security for All My Friends!




Disclaimer
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by C.L. Sheldon & Company, LLC ), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. C.L. Sheldon & Company, LLC does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to C.L. Sheldon & Company, LLC website or incorporated herein, and C.L. Sheldon & Company, LLC takes no responsibility therefore. All such information is provided solely for convenience, educational, and informational purposes only and all users thereof should be guided accordingly. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from C.L. Sheldon & Company, LLC . To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. C.L. Sheldon & Company, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the C.L. Sheldon & Company, LLC ’s current written disclosure statement discussing our advisory services and fees is available for review upon request. DISCLAIMER OF TAX ADVICE: Any discussion contained herein cannot be considered to be tax advice. Actual tax advice would require a detailed and careful analysis of the facts and applicable law, which we expect would be time consuming and costly. We have not made and have not been asked to make that type of analysis in connection with any advice given in this blog post. As a result, we are required to advise you that any Federal tax advice rendered in this blog is not intended or written to be used and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS. In the event you would like us to perform the type of analysis that is necessary for us to provide an opinion, that does not require the above disclaimer, as always, please feel free to contact us.