November 18, 2019 — Late last month it was announced that Social Security and Supplemental Security Income (SSI) benefits for nearly 69 million Americans will increase 1.6 percent in 2020. This follows increases of 2.8 percent in 2019, 2% in 2018 and .3% in 2016.
The 1.6 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 63 million Social Security beneficiaries in January 2020.
The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $137,700, up from $132,900. Separately, Medicare.gov announced that Part B premiums in 2019 will increase by $9.10 a month to $144.60 for most recipients.
The earnings limit for workers who are younger than “full” retirement age (age 66 for people born in 1943 through 1954) will increase to $18,240. (SSA deducts $1 from benefits for each $2 earned over $18,240.) The earnings limit for people turning 66 in 2020 will increase to $48,600. ($1 is deducted from benefits for each $3 earned over $48,600 until the month the worker turns age 66.) There is no limit on earnings for workers who are “full” retirement age or older for the entire year.
COLAs a rare deal in the pension world
Although just about everyone receiving Social Security wishes the COLAs were bigger, it is worth remembering that there are very few examples in the pension world that include a COLA. Many experts in the field wish that the government used a different index, CPI-E, in its COLA calculations, which would better track the expenses of elderly people. However, Mark Hulbert of MartketWatch calculates that if CPI-E had been used for the past 20 years the actual difference in the average retiree’s monthly deposits would have been about $60/ month – nice but not a great deal higher.