The nation's 69 million Social Security beneficiaries will see a slight bump in their checks next year - but not as much as retirees saw in 2019.
The Social Security Administration said Thursday that the cost-of-living adjustment for 2020 will be 1.6%. The uptick falls in line with an estimate released last month by the nonpartisan Senior Citizens League but falls short of the 2.8% offered in 2019 and 2% in 2018.
Next year's 1.6% boost will raise the average retiree benefit of $1,460 by about $23.40 per month, according to Mary Johnson, a Social Security policy analyst at the Senior Citizens League. But that amount is "a big drop from the $40.90 that people with that level of benefits received this year," Johnson said when the group released its estimate.
Social Security cost-of-living adjustments have averaged 1.4% over the past decade. Retirees and other beneficiaries saw no increase in 2010, 2011 and 2016. The Social Security Administration calculates the percent changes using the consumer price index for Urban Wage Earners and Clerical Workers, CPI-W, from the Bureau of Labor Statistics.
Cost-of-living adjustments, which were implemented more than 40 years ago, are meant to counteract the effects of inflation. But economists are concerned that costs are rising at a much faster rate than the purchasing power of Social Security benefits.
For example, research by the Senior Citizens League showed that from January 2000 to January 2019, cost-of-living adjustments increased Social Security benefits by roughly 50%. But costs and services frequently incurred by Social Security beneficiaries climbed more than 100% during the same period. Prescription drugs and fresh groceries, for example, have all become far more expensive.
Furthermore, a study by the Senior Citizens League found that Social Security benefits have lost one-third of their buying power since 2000.
"When a retiree's actual costs climb faster than their [cost-of-living adjustment], the buying power of Social Security erodes," the Senior Citizens League wrote in September.
This article was written by Rachel Siegel, a reporter for The Washington Post.