Social Security Administration Announced COLA for 2020

The Social Security Administration has announced that Social Security and Supplemental Security Income (SSI) benefits for nearly 69 million Americans will get a cost of living adjustment (COLA) of 1.6% in 2020.

The COLA will begin with benefits payable to more than 63 million Social Security beneficiaries in January 2020. The COLA adjustment for the eight million SSI beneficiaries will begin on December 31, 2019.

According to the Social Security Administration’s website, Social Security will replace about 40% of an employee’s pre-retirement income after retirement—more than half of what experts recommend the average person will need. But, retirement plan participants—and even plan sponsors—lack knowledge about how Social Security works. Employees not only need basic education, but they need to know how to include Social Security in their retirement income strategy.

The administration says the Social Security Act ties the annual COLA to the increase in the Consumer Price Index, as determined by the Department of Labor’s Bureau of Labor Statistics. Based on that increase, the maximum amount of earnings subject to the Social Security tax will increase from $132,900 to $137,700.

People will be able to view their COLA notice online through their my Social Security account; they can crease or access this at: www.socialsecurity.gov/myaccount.

Information about Medicare changes for 2020, when announced, will be available at: www.medicare.gov.