The Social Security Administration (SSA) just announced a nominal year-over-year rise in monthly benefits for Social Security and Supplemental Security Income (SSI) recipients.
The October 10 announcement of the 1.6% hike in benefits is in line with what most Social Security watchers expected.
Here’s Your Social Security Cost-of-Living Raise for 2020
The SSA says the 1.6% cost-of-living adjustment (COLA) will begin with benefits payable to Social Security beneficiaries in January 2020. Increased payments to SSI beneficiaries will start on December 31, 2019.
#BREAKING! Nearly 69 million Americans will get a 1.6% increase in monthly #SocialSecurity and #SSI benefits in 2020. Check #SocialSecurityMatters later this morning for more information: https://t.co/BDNvNs2Opi #COLA #2020COLA
— Social Security (@SocialSecurity) October 10, 2019
If you’re wondering why the Social Security COLA for 2020 is so muted, it’s because of inflation — or the relative lack thereof — in the economy.
COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a broad measure of the price of food, energy, health care, housing, transportation and more.
In years when there is no inflation, there is no increase in benefits. However, benefits are never reduced if there’s no inflation.
This year’s relatively small COLA comes on the heels of what was the largest COLA hike in seven years during the 2019 year.
Historical Cost-of-Living Adjustments From the SSA
The average monthly Social Security check in June 2019 was $1,471 for retirees, according to the SSA. That means the 1.6% increase next year will translate to roughly an extra $24 in an average check each month.
While that’s not exactly a lot of money, it’s at least something for the 45% of single elderly people who depend on that monthly check for 90% or more of their income.