Social Security announced that the benefit cost-of-living adjustment (COLA) increase will be 1.6 percent in 2020, the lowest increase since 2017 when it was just 0.3 percent.
This increase will impact nearly 69 million Americans who receive Social Security benefits or Supplemental Security Income (SSI). Benefit payments should reflect the COLA increase beginning in January.
Obviously a 1.6 percent increase is not something Social Security beneficiaries are going to jump for joy over, but there is no use getting angry with Social Security over the amount of increase as the agency had no say in the matter. Each year Social Security’s COLA increase is based on the percentage increase in Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of last year to this year, which was a 1.6 percent increase.
This formula was enacted by Congress in 1972 as part of amendments made to Social Security and the COLA formula began in 1975. Previous to this, Social Security benefits were only increased when Congress enacted legislation. The largest COLA increase for benefits within the last 20 years was in 2009 when the increase was 5.8 percent. Below is a look at all the COLA increases since 1975.
July 1975 — 8.0%; July 1976 — 6.4%; July 1977 — 5.9%; July 1978 — 6.5%; July 1979 — 9.9%; July 1980 — 14.3%; July 1981 — 11.2%; July 1982 — 7.4%; January 1984 — 3.5%; January 1985 — 3.5%; January 1986 — 3.1%; January 1987 — 1.3%; January 1988 — 4.2%; January 1989 — 4.0%; January 1990 — 4.7%; January 1991 — 5.4%; January 1992 — 3.7%; January 1993 — 3.0%; January 1994 — 2.6%; January 1995 — 2.8%; January 1996 — 2.6%; January 1997 — 2.9%; January 1998 — 2.1%; January 1999 — 1.3%; January 2000 — 2.5% ; January 2001 — 3.5%; January 2002 — 2.6%; January 2003 — 1.4%; January 2004 — 2.1%; January 2005 — 2.7%; January 2006 — 4.1%; January 2007 — 3.3%; January 2008 — 2.3%; January 2009 — 5.8%; January 2010 — 0.0%; January 2011 — 0.0%; January 2012 — 3.6%; January 2013 — 1.7%; January 2014 — 1.5%; January 2015 — 1.7%; January 2016 — 0.0%; January 2017 — 0.3%; January 2018 — 2.0%; January 2019 — 2.8%; January 2020 — 1.6%.
Other Information From SSA
Some other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $137,700 from $132,900.
Social Security and SSI beneficiaries are normally notified by mail in early December about their new benefit amount. Most people who receive Social Security payments will be able to view their COLA notice online through their my Social Security account. People may create or access their my Social Security account online at www.socialsecurity.gov/myaccount.
Information about Medicare changes for 2020, when announced, will be available at www.medicare.gov. For Social Security beneficiaries receiving Medicare, Social Security will not be able to compute their new benefit amount until after the Medicare premium amounts for 2020 are announced. Final 2020 benefit amounts will be communicated to beneficiaries in December through the mailed COLA notice and my Social Security’s Message Center.
The Social Security Act provides for how the COLA is calculated. To read more, please visit www.socialsecurity.gov/cola.
