WASHINGTON (AP) — Millions of retirees will get a modest 1.6% cost-of-living increase from Social Security in 2020, an uptick with potential political consequences in an election year when Democrats are pushing for more generous inflation protection.
The cost-of-living adjustment, or COLA, amounts to $24 a month for the average retired worker, according to estimates released Thursday by the Social Security Administration. Seniors have complained that the inflation yardstick used to determine the annual adjustment doesn’t adequately reflect their costs.
The COLA affects household budgets for about 1 in 5 Americans, nearly 70 million people, including Social Security recipients, disabled veterans and federal retirees.
Criticism of the COLA formula has been amplified by Democratic presidential candidates and congressional Democrats. That has helped to shift the Social Security debate from a near-exclusive concern with the program’s solvency to a focus on expanding benefits, including but not limited to the cost-of-living adjustment.
“Most of the discussion about Social Security is about how can we promise more, rather than how can we keep the promises we’re already making,” said Charles Blahous, who as a former public trustee of Social Security once helped oversee the agency’s finances.
With the COLA, the estimated average monthly Social Security payment for a retired worker will be $1,503 a month starting in January.
Joe Schiavone, a retiree who lives on Florida’s Space Coast, said it feels like he’s not keeping up.
“My biggest concern is that your money is buying less and less,” said Schiavone, 81. “The figure that they use for the rise in the cost of living to me is very erroneous.”
He pointed to increased health care costs as the main culprit, and said part of his COLA will likely be eaten up by an increase in Medicare’s “Part B” premium for outpatient care, which hasn’t been announced yet.
Roughly 1 in 2 seniors live in households where Social Security benefits provide at least half the total income. Targeting those seniors, Democratic presidential candidates Elizabeth Warren and Bernie Sanders are proposing to use a measure of inflation that reflects expenses for households headed by a person 62 or older. It usually outpaces the index currently used.
Their Social Security plans would also bolster benefits and raise taxes to keep the program afloat. In Congress, a major Social Security overhaul from Rep. John Larson, D-Conn., would also switch to a new inflation measure, extend Social Security’s solvency by slowly raising the payroll tax rate from 12.4% to 14.8% and increase the amount of earnings subject to the tax.
The White House had no comment Thursday on the COLA debate. Donald Trump ran on a promise not to cut Social Security benefits. Republicans have resisted expanding Social Security, saying that it won’t have enough money to pay full benefits starting in 2035.
Larson said he believes the politics of Social Security are changing because “reality has set in.”
“Many Americans have not recovered their wealth and assets from the great crash of 2008,” Larson said. “During that time, Social Security did not miss a payment. These benefits are essential for their survival.”
Polling shows that Americans have doubts about the future of Social Security. An Associated Press-NORC Center for Public Affairs Research survey from February found that 39% of Americans had little or no confidence that the program will offer the current level of benefits in five years.