The Social Security Administration will increase benefits by 1.6% next year.
Every year, living in the U.S. gets a little more expensive and the administration has to adjust benefits to keep up with the trend.
- Winding it down. Retirees received larger increases in both 2018 and 2019.
- Above average. The average increase over the past 10 years is 1.4% so next year’s increase is slightly higher than the average.
How Does It Affect My Wallet?
Social security checks will be a little fatter next year, but retirees will actually have less buying power. Economists believe consumer prices will increase by 2.73% next year, so the SSA’s raise won’t actually cover the natural rate of inflation.
It’s like taking one step forward but 1.33 steps backwards.
- Ever hear your grandpa say he used to buy a Hershey’s bar for a nickel? Prices naturally increase over time and the inflation rate measures how fast they are increasing.
Moral of the story? You can’t rely on Social Security to take care of everything during retirement. It’s important to get money smart and fund your own retirement through your investments.
We even made a video talking about how Social Security lost $80 billion in 2018, you can watch it on YouTube.
The Social Security Administration will raise Social Security benefits by 1.6% in 2020, but the increase isn’t enough to cover natural price inflation.
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