The Social Security Administration has announced a modest 1.6 percent cost-of-living increase for benefits in 2020. The increase will affect the Social Security benefits received by nearly 69 million Americans.
The SSA estimates that the average retirement benefit will increase $24, bringing it to $1,503 per month, and the average disability payment will rise to $1,258 per month, a $20 bump. The eight million recipients of Supplemental Security Income (SSI) will see a $12 increase in the standard payment, which is rising from $771 to $783.
The SSA annually adjusts payments for the cost of living based on an increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, as determined by the Department of Labor’s Bureau of Labor Statistics. Since 1975, the SSA has based the cost-of-living increase on CPI-W for the third quarter of the current year.
The increase is less than the previous two years. It increased 2 percent in 2018 and 2.8 percent for this year. However, the increase is still better than the 0.3 percent increase in 2017 or the lack of an increase at all in 2016.
While AARP Chief Executive Officer Jo Ann Jenkins says the increase will help Social Security beneficiaries keep up with the rising prices, she argued that it probably won’t be enough, particularly for those coping with increased drug prices.
“Social Security’s annual [cost-of-living] amount typically does not keep pace with all the increases in living expenses that most seniors face, including the costs of housing, food, transportation and, especially, health care and prescription drugs,” Jenkins said in a statement. “AARP’s recent Rx Price Watch report found that retail drug prices increased by twice the rate of inflation during 2017 and have exceeded the inflation rate for at least 12 consecutive years.”
In addition to the benefits increases, the SSA has also adjusted several other important figures. Most notable for Social Security disability applicants is the Substantial Gainful Activity threshold. Applicants now cannot earn more than $1,260 per month to collect benefits. The threshold was $1,220 per month this year.