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. 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.” – Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare.
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.
Social Security Cost-of-Living Adjustments (COLAs) 2010-2019
2010 0.0% 2015 1.7%
2011 0.0% 2016 0.0%
2012 3.6% 2017 0.3%
2013 1.7% 2018 2.0%
2014 1.5% 2019 2.8%
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.” – 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.
According to the most recent Medicare Trustees’ report, the basic Medicare Part B premium will increase by about $8.80 a month to $144.30 per month in 2020. Wealthier earners pay higher Medicare Part B premiums.