Social Security Cost of Living Increase for 2020
The cost of living adjustment (COLA) will increase Social Security benefits by 1.6 percent in 2020, an average of about $24 per month for individuals, the Social Security Administration announced on October 9, 2019.
The increase for 2020 is notably less than the 2.8 percent bump received for 2019, but higher than the average over the past decade (1.4 percent).
The COLA will boost the average Social Security retirement benefit for a single person by $288 per year. The average retirement check is expected to be $1,479 in December 2019 before the COLA raises the benefit to $1,503 a month later, according to the administration.
Social Security is the largest source of retirement income for most retirees, so today’s announcement of a 1.6 percent COLA increase, while modest, will help Social Security beneficiaries and their families as they try to keep up with rising prices.
Social Security’s annual COLA amount typically does not keep pace with all the increases in living expenses that most seniors face, including the costs of housing, food, transportation and, especially, health care and prescription drugs.
Social Security is paid for by a payroll tax on workers’ wages. Next year, the maximum amount of earnings subject to the Social Security tax will increase from $132,900 to $137,700.
The Social Security program does face long-term funding challenges. According to the 2019 annual report from the Social Security and Medicare Board of Trustees, the trust fund reserves that help pay for Social Security benefits will be fully depleted in 2035, unless Congress passes new legislation. Once those funds are exhausted, the program would only be able to pay out 80 percent of what each beneficiary should be getting.
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John D. Miller is the founder/owner of Home Care Partners, LLC, a Massachusetts business providing private duty, personalized in-home assistance and companion care services to those needing help in daily activities and household functions.
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