Next year's cost-of-living adjustment could increase by just $23 a month, one analyst says.
Social Security’s cost-of-living adjustment, or COLA, likely won’t rise much next year, but retirees may not feel any change — especially a positive one — at all.
But the significant drop in COLA between 2019 and 2020 may not be the worst part. Social Security as it stands bases its adjustment on CPI-W, the consumer-price index and buying patterns of younger workers. But young workers and retirees don’t spend their money the same way. “They will spend less on health care and perhaps housing, and those are the two expenses that really make a difference for older Americans,” Johnson said.
As part of his Social Security 2100 Act, John Larson, a Democratic representative from Connecticut, proposed changing the underlying index from CPI-W to CPI-E, which tracks elderly spending and rises faster than the current index Social Security uses.Two of the fastest-growing expenses for retirees are out-of-pocket prescription drug expenses and Medicare Part B premiums, Johnson said, and the latter has the potential to wipe out any COLA increase at all for retirees.
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