Next Social Security Raise Likely Meager
But there could be an increase if higher tariffs on Chinese imports or a spike in gas prices drive up inflation in the third quarter.
An inflation rate of less than 2% may be good news for shoppers, but it’s worrisome for seniors who rely on Social Security for a large part of their retirement income.
The Senior Citizens League, an advocacy group, projects that the annual cost-of-living adjustment for benefits in 2020 will be 1.7%, or about $24 a month for the average monthly payout of $1,420.
The League’s projections are based on the Consumer Price Index through April, says Mary Johnson, the organization’s Social Security and Medicare policy analyst. The COLA could increase if higher tariffs on Chinese imports or a spike in gas prices drive up inflation in the third quarter. Social Security will announce the official increase for 2020 in October.
Some lawmakers and advocates for seniors want to tie the COLA to a “seniors” index that gives more weight to the cost of health care. One roadblock in the way of that change is Social Security’s precarious financial condition. Social Security trustees project that its costs will exceed its income next year. That means the program will need to dip into its nearly $3 trillion trust fund. If Congress doesn’t act to shore up the fund, it will be depleted by 2035, forcing Social Security to reduce benefits to about 80%—and eventually 75%—of promised benefits.