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Social Security COLA for 2020 Announced: Lower Than This Year’s

Category: Social Security

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.

Posted by Admin on November 18th, 2019

16 Comments »

  1. The COLA is not nearly enough to keep up with rising housing costs in New England. This from the Boston Globe today. https://www.bostonglobe.com/metro/2019/11/19/massachusetts-tops-nation-new-index-economic-insecurity-for-elders-living-alone/y0K2iU60Nbi7xhcPncazeP/story.html?et_rid=1759143896&s_campaign=todaysheadlines:newsletter

    by Maimi — November 19, 2019

  2. COLA is based on national averages and not regional (i.e. New England) prices nor should it be as the finances of SSA would not support it. SS was designed to be a supplemental income stream whereby 401k, pensions, IRA, stocks/bonds, other savings, etc. would supplement SS. I recommend selling the NE home and moving to a lower cost area that is tax-friendly to retirees and provides good healthcare (Birmingham metro is a good choice). With the savings in local cost of living area + the proceeds from a home sale in NE region paired with other savings/investment income one could likely finance a comfortable retirement..

    by Danno — November 20, 2019

  3. Big deal….once the COLA data is released, Big Pharma and their ilk get wind of it early and adjust their prices upward. Tired of all the games.

    by Jack Griffin — November 20, 2019

  4. I think SS should be regionalized. I think this about income taxes, as well. Making $200,000 in many places makes you extremely comfortable, but in other regions you could be struggling. My husband and I chose to move to a less expensive area, so that we could enjoy a better lifestyle. Moving to an area where we might not relate to the residents was not an option. People should have choices about where to spend their retirement years. My choice may not work for everyone.

    by Barbara — November 20, 2019

  5. There really isn’t a great place to insert this comment, so we will just go ahead and put it here. Sheldon wrote to say how much he enjoyed our “Best Places” newsletter and asked if we could explain how his wife could sign up for that and our other free newsletters such as the Daily Alert. Here is our response: (Thanks Sheldon!)

    Ellen: Your husband was kind enough to send us a note asking how you could sign up for your own free subscription to our Topretirements newsletters. Just to mention, we have one weekly “Best Places” that you are probably forwarded by Sheldon. There is a Daily Alert which lists new posts, comments, and communities added to the site from the day before. And there are two new communities newsletters, one for the East and one for the West.
    If you go to https://www.topretirements.com/Newsletter.html you can sign up for the Best Places newsletter. If you sign up for that, it will bring you to another page that lists all of the other ones.  Or you can go directly to that page – https://www.topretirements.com/email_notification.html
    Hope to see you as a subscriber soon – and please feel free to join the discussions on the site – we love getting all points of view. For example, how are you and your husband adjusting to retirement, if you both are?

    by Admin — November 20, 2019

  6. Cost of living by percentage just furthers the gap between the rich and poor. At the poor end it won’t even cover the increase in part b. But so typical of our government to make things better for the rich at the expense of the poor.

    by Bob — November 20, 2019

  7. Danno, not all seniors are in the position to pack up and move to a place distant from their homes and loved ones. Many of us have health concerns that require we stay where we are, and many do not want to be far alway from everything we love.

    by Maimi — November 21, 2019

  8. For Bob and others, the gov’t doesn’t make people rich, they earn it. Like the poor don’t earn their lot in life, they just don’t.

    by Ricardo Place — November 21, 2019

  9. Maimi,

    You complained about the price of New England versus the SS COLA. I proffered a solution to lower your expenses and you don’t want to exercise that option. The only other option is for the COLA to outpace inflation which would bankrupt the SS system even sooner. That in turn would deny the younger generation the benefits they paid into the system and expect to receive. you could also sell your home, move in with the local family and use the proceeds of the home sale to help the family pay there bills since you would be under there roof. My Mother complained about prices so I moved her to be near my wife and I in a 55+ apartment complex. She is 3 blocks away in her own apartment and made enough off of her home sale to pay for 30 years of rent. Now she does not have to worry.

    Good luck in your next steps. Danno

    by Danno — November 22, 2019

  10. Maimi:

    You seem bound to your situation for the health care. There is always a reason why we do not just pack up and move. You are also working so you are making an income and I hope you derive much joy from your job. Are your children in your area as well and have they been able to offer any suggestions that you would accept?

    by Jennifer — November 22, 2019

  11. It also depends where you live in New England. I live in Litchfield county, Connecticut. Fairfield county is more expensive. I live in an average raised ranch home and my taxes are around $6,500 a year on my home. That breaks out to $542 a month. my home is paid off. Our cars are taxed too but are older so the taxes are pretty low. My house is what most would be considered too big for two people but there is no where I could live in my area for $542. So, in my opinion, to sell my house and move into an apartment that is smaller and pay like $1,500 a month doesn’t make much sense. Yes, I will have repairs along the way and even if that were to be $500 a month I am still way ahead. We did put money into the home a few years ago and have a new heating system, new vinyl siding, new gutters, new ductless ac unit upstairs, new water tank, new deck. We try to maintain the driveway and have the cracks filled and driveway sealed. It is constant but if we don’t keep up with maintenance, then there will be hell to pay down the road. So my point is, will moving into a smaller place really save you money? I am very aware of sales and take advantage of them. For instance, one grocery store in our area offered turkeys for $0.39 a lb. So, yesterday I bought one and it cost me $5.50 for a 14 lb. turkey! I buy the ‘bargain’ turkeys every year and they are fantastic! I would have bought more but my freezer is packed full! We also love prime rib roasts. We bought one yesterday and it was $7.99 a lb. We bought it and froze it. We will buy several more while they are on sale and freeze them to enjoy next year. There are lots of ways to save money. We rarely eat out because we make restaurant quality foods at home. I am usually disappointed with restaurant food and the quality or portion size. I buy lots of things on line and try to make it so I never have to pay shipping. Walmart requires only a $35 purchase to get free shipping. I buy brand name clothing sometimes on ebay. Some have the original tags still attached. Prices are much lower than if I bought them from the shopping networks. There are so many bargains at the grocery store if you pick them up while on sale and stock up. I have shelving in my garage just packed full of food items I buy on sale. So I would say before you sell your home, think on how you can save money first. Check with your town to see if there is a reduction on your town taxes depending on your income. Sometimes there is heating assistance too. Check in with your senior center to see what information they have on services you can use. Ours has lunch 4 days a week at a suggested rate of about $5 a lunch. They also have some program where you can eat at the local hospital at a reduced price at dinner time. Our town allows seniors to go to the local schools to attend musicals and things like that for free. Ask for senior discounts when you shop. See if your local grocery store offers senior discounts. Ours used to do it weekly and now they have taken it away and do it occasionally. Hotels, movie theaters, some restaurants offer discounts too. Ask for them and take them because you earned them! Oh, and one of my dogs was undergoing cancer treatment (chemo) and that particular Vet. practice gave us a senior discount which really helped out. I lock in on my oil costs each year. I am on a budget plan and locking in assures that my oil price remains the same during the heating season. I also have a Costco Visa card and I charge all my purchases, some bills, car repairs…you name it and at the end of the year I get a cash bonus reward. Next February when I get the cash, it will add up to around $600+. Not a fortune, but I use the Visa to buy needed items, bills and other stuff. I pay off the card religiously each month. Lots of little things add up to savings!

    by Louise — November 22, 2019

  12. Maybe SS COLA’s should be regionalized to cover the actual cost of living for the place they live. Also, I think that seniors who chose to work should not be taxed on the income they earn, and property taxes should be totally deductible from federal taxes so more of us could stay in our homes. There comes a point where seniors have paid enough to support others. These suggestions may actually save the taxpayers money if more seniors could support themselves. Just my thoughts.

    by Maimi — November 23, 2019

  13. Great money-saving ideas Louise! Wow!! I learned a lot that I never knew. Thanks for sharing.

    by Cindy — November 23, 2019

  14. Thanks Cindy! Maybe Admin could start a section on money saving ideas, coupons, deals we could all add to.

    One more thing I would like to mention is to look at your bills to analyze additional charges you might have overlooked. Just recently I realized on my cell phone bill we were paying around $10 a month for each phone for insurance to cover if we lose the phone. That is $240 a year. Yes, good deal if you lose your phone but I decided to take a chance and do away with the insurance altogether. Kind of made me mad I didn’t discover it sooner. Same with the cable bill. You might find that you are paying for services you no longer use or care for. My cable company always has these short term ‘deals’. You get a decent price for maybe a year and then after the deal is done, they jack the price up a lot. I have sometimes called to see if they would give me a new ‘deal’ and I have been turned down at times. Recently I called again and I got someone who looked into my account and said I could get a deal due to my longevity as a customer. Sometimes you just have to get ahold of the right person.

    All I can say is analyze all your bills, get all the grocery bargains and take advantage of any senior discount you can find. Be proactive. If you aren’t already signed up for it, call your local senior center and have them send the monthly newsletter. It will list activities, discounts, tax relief programs and a lot of other stuff.

    by Louise — November 23, 2019

  15. Louise we do have Blog article on money saving ideas, as you mention, and it’s a great idea to bring that to up for members to revisit and add to:

    Living in Retirement on a Tight Budget-Ideas from Members:
    https://www.topretirements.com/blog/financial/living-in-retirement-on-a-tight-budget-ideas-from-members.html/

    by Jane at Topretirements — November 24, 2019

  16. This article from the Boston Globe about Social Security is interesting for seniors. Maybe it is time to change the actuarial tables, because the reward for delaying taking Social Security is too high.
    https://www.bostonglobe.com/metro/2019/12/02/social-security-has-tilted-favor-higher-earners-who-delay-claiming-benefits-report-says/VJXbRxwAEENHmfEgvITJ5O/story.html?

    Editor’s comment: Thanks Maimi, we will explore this further in a future article.

    by Maimi — December 3, 2019

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