WASHINGTON (AP) — Tens of millions of Social Security recipients and other retirees will get a 2.8 percent boost in benefits next year as inflation edges higher. It’s the biggest increase most retired baby boomers have gotten.
Following a stretch of low inflation, the cost-of-living adjustment, or COLA, for 2019 is the highest in seven years. It amounts to $39 a month for the average retired worker, according to estimates released Thursday by the Social Security Administration.
The COLA affects household budgets for about one in five Americans, including Social Security beneficiaries, disabled veterans and federal retirees. That’s about 70 million people, enough to send ripples through the economy.
Unlike most private pensions, Social Security has featured inflation protection since 1975. Beneficiaries also gain from compounding since COLAs become part of their underlying benefit, the base for future cost-of-living increases.
Nonetheless many retirees and their advocates say the annual adjustment is too meager and doesn’t reflect higher health care costs for older people. Federal budget hawks take the opposite view, arguing that increases should be smaller to reflect consumers’ penny-pinching responses when costs go up.
With the COLA, the estimated average monthly Social Security payment for a retired worker will be $1,461 a month next year.
“For more recent retirees, the 2019 COLA will be the largest increase they have gotten to date,” said policy analyst Mary Johnson, of the nonpartisan Senior Citizens League.
But retiree Danette Deakin, of Bolivar, Missouri, said her cost-of-living adjustment is already earmarked for rising expenses.
Her Medigap insurance for costs not covered by Medicare is going up, and so is her prescription drug plan. She expects her Medicare Part B premium for outpatient care will also up.
“It isn’t enough of an increase that it takes care of all of the increases from health care, plus rent — our rent gets increased every year,” said Deakin, 70, who worked in the finance department at a boat dealership.
Health care costs eat up about one-third of her income, she estimated.
“I appreciate the COLA adjustment, and in no way am I complaining,” Deakin added. “It’s just that every single thing you can talk about goes up. It doesn’t go down.”
By law, the COLA is based on a broad index of consumer prices. Advocates for seniors claim the general index doesn’t accurately capture the rising prices they face, especially for health care and housing. They want the government to switch to an index that reflects the spending patterns of older people.