[LFC Comments: When we consider the ever increasing property taxes, and inflationary pressures, and the impact to state revenues, seniors living on fixed income are going to be in a real bind!]
Social Security Announces 1.3% COLA For 2021, One of Lowest Ever Paid
Social Security recipients will receive an annual inflation boost of just 1.3% in 2021. The increase is so small, it’s one of the lowest on record. The 2021 cost of living adjustment (COLA) will increase the average retiree $1,523 benefit by about $20 per month to $1,543. That increase is expected to be significantly offset, or even completely consumed, by rising Medicare Part B premiums.
The COLA was just 1.6% in 2020 and, over the past 11 years, COLAs have been at unprecedented lows, averaging just 1.4% since 2010. That’s less than half the 3% that COLAs averaged from 1990 to 2009.
This minimal growth in Social Security benefits has had the biggest financial impact on the Social Security income of the group of the older retirees who retired in 2009 or before. That group has seen little increase in net Social Security benefits for 11 years. The flat growth in benefits means that younger retirees since 2009 have wound up receiving less Social Security income than they may otherwise have been counting on for future benefits, because the level of their initial benefits is not growing.
Why is the COLA so low? A major reason has to do with whose “market basket” the government is using to measure inflation and calculate the annual adjustment. Under current law, that market basket belongs to younger working adults under the age of 62 who aren’t retired. The Social Security COLA is determined by the percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).