Senior citizens and retirees may be looking at lower cost of living adjustments (COLA) on their Social Security benefits next year.
Looking at data for the first three months of 2020, the estimated COLA for 2021 would be approximately 0.8%, according to the advocacy group The Senior Citizens League, reported CNBC.
To put it in perspective, this year Social Security beneficiaries received a 1.6% COLA. Back in 2019, the adjustment was 2.8%, reported the outlet.
“What’s going on in the first quarter is, primarily, gasoline prices plunged,” said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League. “That’s driving it down because the gasoline is weighted more heavily for the CPI-W and that drives down the COLA.”
Over 65 million Americans receive monthly Social Security benefits, with the average check equaling $1503.
And while 0.8% may be a minimal amount for some, even a small difference can have a devastating effect on recipients who depend on the benefits for the majority of their finances.
“Older Americans are going to be hit by longer term effects,” Johnson said. “Their retirement portfolios have gone down. They’re much more reliant on their Social Security.”
Adding to the beneficiaries’ instability is the fact that the COVID-19 pandemic has affected the elderly especially hard and also caused the price of many consumer goods, like eggs, meat and milk, to rise to new heights.
The exact cost of living adjustment for 2021 won’t be known for five more months as the Social Security Administration isn’t expected to reveal the new COLA rate until October.
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