October 11th, 2019
The Social Security Administration has
announced a 1.6 percent increase in benefits in 2020, nearly half of last
year's change. The small rise has advocates questioning whether the government
is using the proper method to calculate the cost of living for older Americans
and those with disabilities.
Cost-of-living increases are tied to the
consumer price index, and a modest upturn in inflation rates and gas prices
means Social Security recipients will get only a small boost in 2020. The 1.6
percent increase is lower than last year’s 2.8 percent rise and the 2 percent increase in 2018. The
average monthly benefit of $1,479 in 2019 will go up by $24 a month to $1,503 a
month for an individual beneficiary, or $288 yearly.
The cost-of-living change also affects the
maximum amount of earnings subject to the Social Security tax, which will grow
from $132,900 to $137,700.
For 2020, the monthly federal Supplemental
Security Income (SSI) payment standard will be $783 for an individual and
$1,175 for a couple.
The smaller increase may mean that additional
income will be entirely eaten up by higher Medicare Part B premiums. The
standard monthly premium for Medicare Part B enrollees is forecast to rise
$8.80 a month to $144.30. According to USA Today, advocates are questioning the method used to
calculate cost-of-living increases. The Bureau of Labor Statistics uses the
Consumer Price Index for Urban Wage Earners and Clerical Workers to set the
inflation rate. This method looks at prices for gasoline, electronics, and
other items that younger workers rely on. The advocates suggest using a
different index (the Consumer Price Index for Elderly) that puts greater
emphasis on medical and housing expenses.
Most beneficiaries will be able to find out
their cost-of-living adjustment online by logging on to my Social
Security in December 2019. While you will still receive your
increase notice by mail, in the future you will be able to choose whether to
receive your notice online instead of on paper.
For more on the 2020 Social Security benefit
levels, click here.
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