Social Security recipients to get a modest raise

Q: Arewe getting a raise in our Social Security checks for 2021?

A: Yes, but amodest one. The Social Security Administration says seniors will receive a

1.3% cost-of-living increase in 2021, or about

$20 a month for the average beneficiary. The annual adjustmentwas based on changes in the consumer price index in the third quarter.

Lowinflation has depressed annual costof-living increases in Social Security benefits in recent years. The COLA hasn’t risen by more than 3% since 2012, and itwas flat in

2010, 2011 and 2016.

“People who have been receiving benefits for 12 years or longer have experienced an unprecedented series of extremely lowcostof-living adjustments,” Mary Johnson, Social Security policy analyst for the Senior Citizens League, said in a statement.

Senior advocacy groups say the index used to calculate the annual cost-of-living increase gives too muchweight to items purchased by younger people, such as gas and electronics. They’d like Social Security to use a “seniors index” that gives greaterweight to the cost of health care.

The annual adjustmentwill also affect the maximum amount of earnings that will be subject to Social Security taxes. In 2021, the cutoff will be $142,800, up from $137,700 in

2020.

Q: Do I need towait until I turn 72 1⁄ to

2 take a required minimum distribution, or can I take it anytime during the year that I turn 72? Formaking a qualified charitable deduction, do I need towait until I am

70 1⁄ or can I make aQCDanytime during

2 the year inwhich I reach that age? I will turn 70 on Dec. 24, so Iwon’t have much time to make aQCDif Imustwait until then.

A. Let’s answer your second question first. To make a qualified charitable distribution, youmust be 70 1⁄ at the time of the distribu

2 tion or it will be treated as taxable income. So, yes, you mustwait until your half birthday on Dec. 24 tomake your firstQCD.

It’s a little different for required minimum distributions. You can take your firstRMDat any point in the calendar year that you turn

72, including before your birthday, but the deadline for taking the first RMDis April 1 of the year after you turn 72; thereafter, the deadline is Dec. 31 for each year.

Sandra Block is a senior editor at Kiplinger’s Personal Finance magazine and Catherine Siskos is managing editor atKiplinger’s Retirement Report. For more on this and similar money topics, visitKiplinger.com.