Social Security checks are getting a boost in 2020, but will it be enough to keep up with the rising cost of living?
While the actual cost of living adjustment (COLA) numbers won’t be released by the Social Security Administration until October, The Senior Citizens League, which has a good track record of projecting these adjustments, released their projections Thursday, according to CNBC.
And it doesn’t look great.
The nonpartisan group projects Social Security checks will be boosted by 1.6% in 2020, which is much lower than the 2.8% increase beneficiaries saw in 2019. The average for checks at the moment is $1,460, so that would be an increase of about $23.40 per month, instead of $40.90 this year.
The 1.6% increase is the lowest COLA since 2017, and the adjustments have averaged 1.4% over the last 10 years.
More money is always a nice thing, but the problem lies in rising costs of living in retirement, especially when it comes to health care. Social Security benefits have had a hard time keeping up with rising costs of goods and services, and a recent study, also conducted by the Senior Citizens League, found Social Security’s buying power has plummeted 33% since 2000.
“One would think that a higher cost-of-living adjustment in 2019, combined with relatively low inflation, would lead to an improvement of buying power in Social Security benefits,” said Mary Johnson, a Social Security policy analyst for the League and the author of the study. “But any improvement was offset by spiking costs of essentials, including out-of-pocket spending on prescription drugs.”
And more trouble is brewing on the health care front, as Medicare Part B premiums are projected to jump almost $10 from $135.50 in 2019 to $144.30 per month in 2020. So there goes half the COLA increase for senior citizens on Medicare. Retirees receiving the lowest Social Security benefits — around $550 a month or less — would see their COLA completely eaten up by the Medicare price bump.
Stay tuned to Money and Markets for an update when the actual COLA numbers are released, and what those adjustments mean for you and your retirement.