Social Security beneficiaries might not receive much of a cost-of-living adjustment next year — and some say recipients might not get anything at all
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The adjustment in 2020 was considered minimal, at 1.6% this year, down from 2.8% in 2019. COLAs have averaged 1.4% over the last decade, down from the average 3% it was between 2000 and 2009.But even if the adjustment was above zero, it still wouldn’t be enough for most retirees, studies show. Many Americans rely on Social Security benefits for some, and in some cases most, of their retirement income, but the benefit doesn’t align with actual cost of goods for retirees.
The problem: Social Security’s cost-of-living adjustment is linked to the consumer-price index for urban workers. There’s another subset of CPI, known as CPI-E, which tracks elderly spending. The difference is primarily in health care and housing. Those expenses, including Medicare premiums and homeowners’ insurance, grow rapidly year over year, but benefit adjustments don’t reflect that growth.
Also see: Should people be able to tap Social Security now to shore up coronavirus-battered finances?
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