Sep 15, 2020
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Older Americans already struggling financially amid the COVID-19 pandemic probably won’t find much solace in their Social Security checks next year.
The 68 million people – including retirees, as well as disabled people and others – who rely on Social Security are likely to receive a 1.3% cost-of-living adjustment next year because of paltry inflation, according to an estimate by the Senior Citizens League, an advocacy group. For the average retiree who got a check of $1,517 this year, that would mean an additional $19.70 a month.
“It makes people have to take more out of savings,” says Mary Johnson, a policy analyst for the Senior Citizen League who releases an estimate ahead of next month's official government figure. “Other people who don’t have savings will go into debt. Many may go into poverty.”
A 1.3% COLA would be among the smallest ever and slightly below the 1.4% average over the past decade, a period of unusually low inflation, according to the Senior Citizens League. And it would be less than half the 3% average bump in the previous decade. This year’s increase was 1.6%, which boosted the average retiree’s monthly check by $23.40.
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Nearly 43 million beneficiaries could see their cost-of-living increase effectively wiped out because of increases in premiums for Medicare Part B, which are automatically deducted from many Social Security checks. For others, the Medicare offset could make any COLA benefit marginal. Under a "hold harmless" provision, Medicare premium increases are generally adjusted so they don't reduce Social Security benefits.
Johnson reckons the Medicare Part B premium could rise by a hefty $17.40 a month in 2021 because of large pandemic-related Medicare costs.
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