The Social Security Administration announced a 1.6% cost-of-living adjustment in benefits beginning January 2020. The 2020 COLA is the smallest increase since 2017, when it was 0.3%.
For the average Social Security recipient, collecting $1,461 a month, the increase amounts to about $23.
In addition to next year’s COLA, the Social Security Administration announced a new maximum for earnings subject to the Social Security tax and new limits for the amount of earnings of recipients who haven’t reached full retirement age that would not be subject to benefit deductions.
The maximum amount of earnings subject to the Social Security tax increases to $137,700 in 2020, up 3.6% from $132,900 this year.
The earnings limit for recipients who have not reached full retirement age will be $18,240 in 2020, above which $1 in benefits will be deducted for every $2 earned. For recipients turning 66 in 2020, however, the earnings limit will be $48,600 and $1 will be deducted for each $3 earned until the month the beneficiary turns 66.
The Senior Citizens League says the 1.6% COLA for 2020, which is sharply below this year’s 2.8%, continues a “worrisome trend in which COLAs have averaged just 1.4% from 2000 to 2010,” down from 3% average from 2000 to 2009.
Mary Johnson, the league’s Social Security policy analyst, notes that “people who have been retired for 10 years or longer have absorbed the full financial blow of low COLA growth.”