Don't like to read?
Nearly 70 million Social Security and Supplemental Security Income (SSI) beneficiaries can expect a 3.1 percent increase beginning January 2021, according to an SSA announcement on Oct. 13, 2020. In August, forecasters thought the cost of living adjustment (COLA) would be between 0.50 and 1 percent.
COLAs are calculated using data from the Consumer Price Index for Urban Earners and Clerical Workers (CPI-W). The average CPI-W index numbers for July-September 2019 are compared to those from the same quarter for 2020. The percentage change between the two quarterly averages determines the cost of living changes for the next year.
Unfortunately, the circumstances of the coronavirus pandemic depressed the economy. The prices for essential medical supplies like gloves, peroxide, and OTC medications skyrocketed after panic shopping emptied retailers’ shelves.
Price gouging occurred during the first quarter of 2020 — prices for grocery items such as meat and dairy have soared throughout the year. Conversely, the price of regular gas fell from $2.60 a year ago to $2.19, according to AAA in August. Based on the method used to determine COLAs, the first quarter would not be considered.
David Certner, AARP’s director of legislative policy for government affairs, offered the aforementioned range. Other experts predicted the Social Security COLA would be as low as 0.44 and as high as 1.1 percent.
The average Social Security retirement beneficiary receives $1,514.13 monthly. Based on 3.1 percent, the increase is $19.68.
According to the SSA website, COLA notices will be available online in the Message Center of their “my Social Security” account in December 2020.
Written by Cathy Milne-Ware
Social Security Administration: Social Security and Supplemental Security Income
AARP: Social Security COLA Forecast for 2021
Featured and Top Image Courtesy of FDR Presidential Library & Museum’s Flickr Page – Creative Commons License
Inset Image Courtesy of AFGE’s Flickr Page – Creative Commons License