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Herb Weiss, contributing writer on aging
The Social Security Administration (SSA) announced that Social
Security and Supplemental Security Income (SSI) benefits for nearly 69 million
Americans will increase 1.6 percent in 2020 (Some recipients receive both
Social Security and SSI benefits).
Social Security and SSI recipients will be notified about their
new benefit amount by mail in early December. This COLA notice can also be
viewed online through their My Social Security account. People may create or
access their my Social Security account online at http://www.socialsecurity.gov/myaccount.
According to SSA, the 1.6 percent COLA increase will begin
with benefits payable to more than 63 million Social Security beneficiaries in
January 2020. Increased payments to more than 8 million SSI beneficiaries will
begin December 31, 2019. The Social Security Act ties the annual COLA to the
increase in the Consumer Price Index as calculated by the Department of Labor’s
Bureau of Labor Statistics.
The maximum amount of earnings subject to the Social
Security tax (taxable maximum) will increase from $132,900 to $137,700, says
The earnings limit for workers who are younger than “full”
retirement age (age 66 for people born in 1943 through 1954) will increase to
$18,240. SSA will deduct $1 from benefits for each $2 earned over $18,240.
The earnings limit for people turning age 66 in 2020 will
increase to $48,600. SSA will deduct $1 from benefits for each $3 earned over
$48,600 until the month the worker turns age 66.)
There is no limit on earnings for workers who are “full”
retirement age or older for the entire year.
COLA Not Keeping Up with Rising Cost of Living
Over the years, Social Security’s COLA has not provided
financial protection against rising costs, charge aging advocacy groups.
Social Security checks in 2019 are as much as 18 percent
lower due to the impact of extremely low COLAs over the past 10 years, says an
analysis recently released by the Arlington, Virginia-based The Senior Citizens
League (TSCL). TSCL’s Social Security policy analyst, Mary Johnson authored
Johnson’s analysis noted that from 2000 to 2010, COLAs
routinely averaged 3 percent
annually. People who have been receiving Social Security checks since 2019,
have only seen a COLA higher than 2,8 percent one time (in 2012), she said,
noting that Social Security benefits have lost 33 percent of buying power since
Johnson’s findings reported that in 2010, 2011, and 2016
there was no COLA payable at all and, in 2017, the COLA was just 0.03 percent.
However, in 2018, the COLA was 2 percent, but rising Part B premiums consumed
the entire increase for roughly half of all beneficiaries.
Calls for Strengthening the COLA
According to the National Committee to Preserve Social
Security and Medicare (NCPSSM), the upcoming COLA change will give a whopping
$24 per month increase for the average beneficiary. With Medicare Part B
premiums expected to rise around $8 next year, the net cost-of-living
adjustment for most seniors will be only $16 per month. The new COLA brings the
average monthly retirement benefit up to $1,503 — it’s just a $288 yearly raise
for seniors living on fixed incomes.
NCPSSM notes that roughly half of America’s seniors rely on
Social Security for at least 50 percent of their income, and 1 in 4 depending
on the program for at least 90 percent of their income, the 2020 COLA increase
does not go very far in helping these recipients pay their bills. A $16 per
month probably won’t cover typical expenses, such as the cost of a single
prescription copay, a month’s medical supplies, or transportation to a doctor’s
appointment, adds the Washington, DC- advocacy group whose goal is to protect
Social Security and Medicare.
“It’s ironic that as billionaires and big corporations
continue to profit from the $1.5 trillion in Trump/GOP tax cuts, America’s
seniors are to get by with a meager $24 monthly raise,” says Max Richtman in a
statement after SSA announced the 2020 COLA increase. NCPSSM’s President and
CEO. “The negligible 2020 COLA illustrates why seniors need a more accurate
formula for calculating the impact of inflation on their Social Security
benefits. For years, we have urged the government to adopt the CPI-E (Consumer
Price Index for the Elderly), which reflects the spending priorities of
seniors, including health care, as opposed to the current formula based on
younger urban wage earners’ expenses,” says Richtman.
If the CPI-E were adopted, beneficiaries would see a 6
percent overall increase in benefits over 20 years compared to the current
formula used, which yielded a zero cost-of-living adjustment three times during
the past decade — and a mere 0.3 percent in 2017, says Richtman, noting that
health care costs have increased about 6 percent in 2019 alone.
“The prices of the most commonly prescribed drugs for
seniors on Medicare rose ten times the rate of inflation from 2013-2018. The
cost of senior living facilities is growing at 3 percent annually – which adds
up quickly over time,” adds Richtman.
Adds Webster Phillips, NCPSSM’s Senior Legislative
Representative, “COLAs are out of sync with seniors’ actual expenses. Retirees
have been living on very tight cost-of-living adjustments for a number of years
now, which forces them to make hard decisions about their monthly budgets.”
In a statement, AARP chief executive officer Jo Ann Jenkins
said, “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. AARP’s recent Rx Price Watch report 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,” she says.
“AARP will continue our advocacy for bipartisan solutions to
help ensure the long-term solvency of the Social Security program, as well as
adequate benefits for recipients. We will also continue to fight for lower
health care and prescription drug costs, which are eating up a growing share of
Social Security benefits,” adds Jenkins.
TSCL’s Mary Johnson says that her group calls on Congress to
require a minimum COLA of no less than 3 percent every year, even in years when
inflation falls below that amount. “Strengthening the COLA,” she says, “would
help slow the drain of retirement savings and help keep older Americans out of
For information about Social Security benefits and claiming
strategies, those approaching retirement age may visit AARP’s Social Security
Resource Center, at https://www.aarp.org/retirement/social-security/.
Previously published in the Woonsocket Call on Oct. 27, 2019