The cost of living adjustment (COLA) will increase Social Security benefits by 1.6 percent in 2020. This comes out to an average of about $24 per month for individuals, the Social Security Administration announced on Wednesday.
This increase for 2020 is less than the 2.8 percent increase given out for 2019, but higher than the average over the past decade (1.4 percent).
The COLA boosts 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.
Cost of Living: Social Security Benefit
Social Security is the largest source of retirement income for most retirees. Therefore, this week’s announcement of the 1.6 percent COLA increase helps families keep up with rising prices, to a certain extent.
While these raises are always helpful, it’s obvious that it still does not keep up with the cost of living expenses faced by senior citizens. Their expenses include food, housing, transportation and prescription drugs. Indeed, many seniors are struggling as AARP’s recent report shows.
They found that retail drug prices increased by twice the rate of inflation during 2017, and have exceeded the inflation rate for at least 12 consecutive years.
Medicare Part B
The monthly premium for Medicare Part B recipients will be announced soon. This premium could affect individual Social Security benefits because it is deducted directly from benefit payments. Part B Medicare covers physician and diagnostic services, outpatient hospital services, certain home health services and durable medical equipment.
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.
However, it’s important to mention the black cloud that hovers on the horizon. And, that is the Social Security program faces long-term funding challenges.
According to the 2019 annual report from the Social Security Trustees, the trust fund reserves will be fully depleted in 2035. Congress must address this problem. If funds are exhausted, the program can only pay out 80 percent of what each beneficiary should be getting.
If you need more information regarding your Social Security benefits, contact the Social Security administration at: 1-800-772-1213