Will your Social Security check get bigger? How COLA benefit bumps are determined
Experts expect the 2021 increase in benefits will be smaller than what beneficiaries received this year
Experts expect a modest increase in Social Security benefits will be announced this week, following a 1.6% bump in 2020.
The Social Security Administration uses a formula to determine what the cost of living adjustment will be each year. It is based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers, which are calculated on a monthly basis by the Bureau of Labor Statistics. Benefits will increase if there is a measurable increase in the index year over year.
BLS is scheduled to announce CPI data on Tuesday.
Cost of living adjustments, which began in 1975, are implemented in order to counteract the effects of inflation. However, some senior advocacy groups have expressed concerns that costs have risen faster than inflation throughout recent years.
According to The Senior Citizens League, benefits have lost 30% of their purchasing power since the year 2000.
SOCIAL SECURITY BENEFITS IN 2021: HOW MUCH YOUR CHECK IS LIKELY TO INCREASE NEXT YEAR
The cost of living adjustment for next year is likely to be 1.3 %, according to estimates put forth by The Senior Citizens League, which the group characterized as “extremely low.” This estimate is based on data released through September and is subject to change based on Tuesday’s reading.
Benefits increased by 1.6 % in 2020, 2.8% in 2019, 2% in 2018, 0.3 percent in 2017 and 0% in 2016.