Social Security recipients will get $20 more each month in 2021

Social Security and disability benefits will rise by 1.3% next year, with the average monthly benefit increasing by $20 to $1,543 from $1523, according to the Social Security Administration.

The increase accounts for the rise in inflation and is calculated by assessing the change in the consumer price index from the third quarter of 2019 to the third quarter of 2020.

Read more: Social Security, Medicare, and retirement benefits: How they work

The 64 million Americans receiving regular Social Security benefits will see the increase starting January 2021. Increased payments for the 8 million Americans who receive Supplemental Security Income (SSI) benefits will start December 31, 2020.

The SSA will notify beneficiaries by mail in early December about the increased benefit amount. You can also check out the new amount through your personal Social Security account online.

For workers, the maximum amount of earnings subject to the Social Security tax also increased to $142,800 from $137,700. This also goes into effect in January.

The SSA uses the consumer price index for urban wage earners and clerical workers, or CPI-W. This is a monthly measure of the average change over time in the prices paid by urban wage earners and clerical workers for a market basket of consumer goods and services. 

Read more: Read more: Here's how to recession-proof your retirement plan

While CPI-W has long been the traditional measure determining this benefit increases, experts — as well as presidential candidate Joe Biden — have advocated for the benefit to track the CPI-E, the consumer price index for the elderly, which is based on spending by adults age 62 and older. This weighs health care spending more and increases faster than the CPI-W.

The Bureau of Labor Statistics has also calculated that medical services increased at a 5% rate in the past year as well as the cost of home-care rising 4%. The benefit bump may not be enough to accommodate these cost increases.

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Trump and Biden on the campaign trail
President Donald Trump waves to supporters after speaking at a campaign rally in Gastonia, N.C., Wednesday, Oct. 21, 2020. (AP Photo/Nell Redmond)
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President Donald Trump speaks during an NBC News Town Hall, at Perez Art Museum Miami, Thursday, Oct. 15, 2020, in Miami. (AP Photo/Evan Vucci)
Democratic presidential candidate former Vice President Joe Biden participates in a town hall with moderator ABC News anchor George Stephanopoulos at the National Constitution Center in Philadelphia, Thursday, Oct. 15, 2020. (AP Photo/Carolyn Kaster)
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Democratic Presidential candidate and former US Vice President Joe Biden (L) and moderator George Stephanopoulos participate in an ABC News town hall event at the National Constitution Center in Philadelphia on October 15, 2020. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
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President Donald Trump moves to the song YMCA as he finishes a campaign rally at John P. Murtha Johnstown-Cambria County Airport in Johnstown, Pa., Tuesday, Oct. 13, 2020. (AP Photo/Gene J. Puskar)
Supporters look on as Democratic Presidential Candidate Joe Biden speaks during a drive in rally in Miramar, Florida on October 13, 2020. - Joe Biden headed for Florida to court elderly Americans who helped elect Donald Trump four years ago but appear to be swinging to the Democratic candidate for the White House this time around amid the coronavirus pandemic. Biden, at 77 the oldest Democratic nominee ever, is to "deliver his vision for older Americans" at an event in the city of Pembroke Pines, north of Miami, his campaign said. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
Supporters listen as President Donald Trump speaks during a campaign rally at John Murtha Johnstown-Cambria County Airport, Tuesday, Oct. 13, 2020, in Johnstown, Pa. (AP Photo/Evan Vucci)
Congresswoman Debbie Wasserman Schultz (D-FL) wears a mask depicting Democratic Presidential Candidate Joe Biden as he speaks during a drive in rally in Miramar, Florida on October 13, 2020. - Joe Biden headed for Florida to court elderly Americans who helped elect Donald Trump four years ago but appear to be swinging to the Democratic candidate for the White House this time around amid the coronavirus pandemic. Biden, at 77 the oldest Democratic nominee ever, is to "deliver his vision for older Americans" at an event in the city of Pembroke Pines, north of Miami, his campaign said. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
President Donald Trump throws face masks into the crowd during a campaign rally at John Murtha Johnstown-Cambria County Airport, Tuesday, Oct. 13, 2020, in Johnstown, Pa. (AP Photo/Evan Vucci)
The Florida state flag hands behind Democratic presidential candidate former Vice President Joe Biden as he speaks at Southwest Focal Point Community Center in, Pembroke Pines, Fla., Tuesday Oct. 13, 2020. (AP Photo/Carolyn Kaster)
President Donald Trump speaks during a campaign rally at John P. Murtha Johnstown-Cambria County Airport in Johnstown, Pa., Tuesday, Oct. 13, 2020.(AP Photo/Gene J. Puskar)
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Supporters cheer as President Donald Trump departs a campaign rally at John P. Murtha Johnstown-Cambria County Airport in Johnstown, Pa., Tuesday, Oct. 13, 2020. (AP Photo/Gene J. Puskar)
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Supporters cheer as President Donald Trump arrives for a campaign rally at John P. Murtha Johnstown-Cambria County Airport in Johnstown, Pa., Tuesday, Oct. 13, 2020. (AP Photo/Gene J. Puskar)
Democratic presidential candidate former Vice President Joe Biden speaks at Miramar Regional Park in Miramar, Fla., Tuesday Oct. 13, 2020. (AP Photo/Carolyn Kaster)
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MIRAMAR, FLORIDA - OCTOBER 13: Wearing a face masks and sitting in their cars to reduce the risk posed by the coronavirus, supporters listen to Democratic presidential nominee Joe Biden delivers remarks during a drive-in voter mobilization event at Miramar Regional Park October 13, 2020 in Miramar, Florida. With three weeks until Election Day, Biden is campaigning in Florida. (Photo by Chip Somodevilla/Getty Images)
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Dhara is a reporter Yahoo Money and Cashay. Follow her on Twitter at @Dsinghx.

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