Social Security is Giving you a Pay Raise in 2020!

Social Security is Giving you a Pay Raise in 2020!

December 19, 2019
Share |

Social Security is Giving you a Pay Raise in 2020!

You may have heard that that Social Security recipients will receive a 1.6% cost-of-living (COLA) adjustment for 2020. Those increased payments will start in January 2020. The purpose of the COLA is to ensure the purchasing power of Social Security benefits is not eroded by inflation. “Congress enacted the COLA provision as part of the 1972 Social Security Amendments, and automatic annual COLAs began in 1975. Before that, benefits were increased only when Congress enacted special legislation.”[1]

While it is exciting to think that you will be getting an increase in your monthly check next year, it is important to recognize that the average monthly check will increase by a mere $24 dollars (some will get more than that but, there will be many who will receive less).[2] The COLA increase is given to help recipients cover the cost of inflation. While the 1.6% increase in benefits will cover some costs, it is worth pointing out that medical expenses, one of the largest expenses for retirees, have seen a much higher inflation rate, 3.46% in 2019. [3] The cost of Medicare will increase in 2020 as well. The standard Part B premium alone will increase by a little over $9/month. [4]

Social Security is an important part of retirement income but, it is inadequate on its own. While COLA adjustments help to cover some inflationary costs, there are many costs that will exceed them. That is why you should have a good plan to cover all of your retirement needs, regardless of inflation.

At Pinnacle Wealth Management, we utilize Wealth Plans to look at all of your retirement needs. We factor in all income sources including Social Security, Pensions, Retirement Accounts, and any other assets you might have that supply a monthly income. Then we help you to define your expenses. Most of us have fixed expenses that are non-negotiable and others that can be altered based on needs and wants. This helps us to determine a good baseline for what you can reasonably spend while keeping up with inflation.

Fortunately, Social Security should continue to give COLA increases to its recipients on an annual basis which is good, but there are no guarantees. It is our goal to use effective planning to help you to prepare for your future financial needs whatever increases Social Security gives in the future.

Are you concerned about your retirement funding? Would you like to have a better plan in place that will help you to better prepare for inflation?  Contact our office and we would be happy to discuss your financial future and help you to put a plan in place that will help you to feel more secure.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.





Blog Image: Photo by Burst