How much do you know about COLA right now? It may sound confusing just to consider it, but this term is important to understanding Social Security benefits. COLA is an acronym for the term “Cost of Living Adjustment.” It defines the annual increase in the Social Security benefits paid to Social Security recipients.
COLA is not a static figure. In fact, the COLA is examined on an annual basis to determine if an adjustment is necessary. Raises to Social Security benefits only occur when the Consumer Price Index increases. The Consumer Price Index tracks the markets for many different goods and services, and provides a way to see what Americans, including seniors, are paying for everything from shelter and food to cars and plane tickets.
What you may not realize is that COLAs are going to become increasingly important to a very large section of our country. Baby Boomers are becoming increasingly eligible for Social Security benefits. What is a Baby Boomer? Baby Boomers are most often defined as those individuals born between 1946 and 1964.
Right now, the majority of Baby Boomers have not yet reached Social Security age so they are not yet impacted by the Cost of Living Adjustment. The ones eligible for Social Security, however, have seen sporadic increases. The most recent one occurred at the beginning of 2019. The COLA increased recipients checks by 2.8%. It was the largest adjustment administered since 2012.
There will be another COLA in 2020, but 2020’s increase will not be as large as 2019’s increase. This year’s COLA increase of 1.6% may depend on the amount of the Social Security benefit the beneficiary received. Let us share an example. For the average recipient of retirement benefits, who is receiving $1,427 per month from Social Security, he or she may receive an additional $23 monthly increase.
We know this article may raise more questions than it answers. We would love to answer your questions on this or any of the elder care issues facing you and your loved ones in the New Year. Do not wait to contact us to schedule a meeting with attorney Alan Hougum.
