Next year, seniors will receive a meager 1.3% Social Security cost-of-living adjustment (COLA). It will be the lowest COLA since 2017. The average beneficiary will receive a paltry $20 more in monthly benefits – and that’s before the increase in Medicare Part B premiums is deducted. The 2021 COLA would be barely enough for one prescription co-pay or half a bag of groceries.
“The timing of this minimal COLA could not be worse. The COVID pandemic has devastated many older Americans both physically and financially. Seniors living on fixed incomes need a lifeboat; this COLA increase is more like an underinflated inner tube.” – Max Richtman, president and CEO, National Committee to Preserve Social Security and Medicare, 10/13/20
Seniors could lose almost half of their COLA increase to a rise in the Medicare Part B premium, which has not yet been announced. Last Spring, the Medicare trustees projected an $8.70 increase. The Medicare Part B premium has not yet been determined and will capped at 25% of what it otherwise would be for 2021, as required by a short-term appropriations bill that funds the government through Dec. 11.
The current COLA formula – the CPI-W – is woefully inadequate for calculating the true impact of inflation on seniors’ pocketbooks. It especially under-represents the rising costs that retirees pay for expenses like health care, prescription drugs, food, and housing. We support the adoption of the CPI-E (Consumer Price Index for the Elderly), which properly weights the goods and services that seniors spend their money on.
This chart shows Social Security COLAs since 2011. Note that the COLA was 0% in two of these years.
The next Congress must adopt the CPI-E, which is part of Rep. John Larson’s Social Security 2100 Act – a landmark piece of legislation to boost benefits endorsed by the National Committee. We also strongly support Rep. Peter DeFazio’s bill to provide an emergency 3% Social Security COLA for 2021, due to the extraordinary challenges seniors face during the COVID pandemic. The CPI-E is part of Joe Biden’s plan for older Americans, one of the many reasons that the National Committee has endorsed him for president