The scant 1.6% Social Security cost-of-living adjustment (COLA) for 2020 is another big disappointment for America’s seniors. The paltry new COLA will yield a $24 per month increase for the average beneficiary. With Medicare Part B premiums predicted to rise by about $8 next year, the net cost-of-living adjustment for most seniors will be only $16 per month. The new COLA inches-up the average monthly retirement benefit to $1,503 — a mere $288 yearly raise for seniors living on fixed incomes.
“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 asked to get by with a meager $24 monthly raise,” says Max Richtman, President and CEO of the National Committee to Preserve Social Security and Medicare. “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,” Richtman says.
If the CPI-E were adopted, beneficiaries would see a 6% overall increase in benefits over 20 years compared to the current formula, which yielded a zero cost-of-living adjustment three times during the past decade — and a mere 0.3% in 2017. Meanwhile, health care costs have increased about 6% 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% annually – which adds up quickly over time.
“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,” says Webster Phillips, Senior Legislative Representative, National Committee to Preserve Social Security and Medicare
With roughly half of America’s seniors relying on Social Security for at least 50% of their income, and 1 in 4 depending on the program for at least 90% of their income, the 2020 COLA does not go very far toward paying the bills. A net increase of $16 per month probably won’t cover typical expenses, such as the cost of a single prescription co-pay, a month’s medical supplies, or transportation to a doctor’s appointment.
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