How familiar are you with the Social Security program? As we start a New Year, it is critical for Florida seniors to understand as much as possible about their government benefits. COLA is an acronym for “Cost of Living Adjustment.” Understanding this term is an important part of Social Security and your benefits overall. We often find that COLA is everyone’s favorite term because it can raise the monthly payments received by Social Security beneficiaries.
The Social Security administration examines the Consumer Price Index each year to determine whether or not there needs to be an adjustment. One of the reasons the agency does this is to make sure that recipients benefit checks keep up with the cost of necessities.
The numbers that go into this calculation for Social Security’s annual adjustment to benefit payments come from examining price increases during the prior year’s summer months. The Department of Labor computes the Consumer Price Index by averaging the prices for the months of July to September. It compares that average to the same average from the previous year. Prices for things that the average consumer needs are found in the index. For example, it contains figures for rent, power, food, and transportation. The Social Security administration then uses these figures to determine if a COLA is necessary.
The COLA provided a 2.8% boost to Social Security benefits at the beginning of 2019. This was the largest adjustment distributed since 2012. The final numbers are in for 2020’s COLA, however, and it will be smaller than 2019’s. This year’s COLA will be 1.6%. This means the size of the raise will be based on the size of the benefits received. For example, the average recipient of retirement benefits who is receiving $1,427 per month from Social Security will receive an additional $23 monthly increase.
Planning for Social Security benefits is just a part of the overall consideration each Florida seniors needs to make when it comes planning for his or her elder care needs. Ask yourself now if you could afford the cost of an assisted living facility or a skilled nursing facility should you face a health care crisis right now. We find that most Florida seniors are not prepared for a future that may include the need for long-term care outside the home. We encourage you to learn more from us and schedule a meeting with attorney Scott Selis to discuss your needs or the needs of your aging loved ones.