WASHINGTON — Social Security recipients are likely to get a 1.3 percent cost of living adjustment in 2021, making it the second lowest ever paid, according to The Senior Citizens League.
“Our forecast is based on Consumer Price Index through August, and there is still one more month of consumer price data to come in before we get the official announcement in October, says Mary Johnson, Social Security policy analyst for The Senior Citizens League.
Based on historic trends, there’s only a 5 percent chance that the COLA could rise above 1.3 percent and a 15 percent chance that it could be lower.
Although the inflation rate during May through August suggests the COLA could go up to 1.4 percent, the more recent three — month rate from June through August, and a new downward trend in gasoline prices seem to indicate it will probably be 1.3 percent,” Johnson said.
Should the forecast prove to be correct, this would make the fifth time since 2010 that there will be an extremely low, or even no, annual inflation adjustment.
“This is more evidence that our system to adjust benefits for inflation, is broken,” Johnson said.
The COLA was zero in 2010, 2011, and 2016. It was just 0.3 percent in 2017. Since 2010, annual COLAs have averaged 1.4 percent.
According to The Senior Citizens League, benefits have lost 30 percent of their purchasing power since the year 2000.
The Social Security Administration uses a formula to determine what the COLA 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.
The Social Security COLA is expected to be announced Oct 13.