It is a common myth that European explorers purchased the island of Manhattan for $24 worth of trinkets. Wondering how this is applicable to Social Security in any way? You’ll see…
Beginning in January of 2020 nearly 70 million Americans will see an increase in their Social Security and Supplemental Security Income (SSI) benefits. The administration recently announced a 1.6% Cost-of-Living-Adjustment (COLA).
Cost-of-Living-Adjustments are meant to ensure that the purchasing power of a benefit is not eroded by inflation. Automatic annual COLAs began in 1975 after being enacted by Congress in 1972. The COLAs are tied to the annual increase in the Consumer Price Index, which has dropped since 2018, explaining the reduction in COLA from 2019’s rate of 2.8%.
The earnings limit for workers who are younger than ‘Full Retirement Age’ will increase to $18,240. For every $1 earned over $18,240 the Social Security Administration will deduct $0.50 from your benefit. There is no limit on earnings for workers who are ‘Full Retirement Age’ or older for the entire calendar year.
In 2019 the average social security monthly benefit is $1,461. The 1.6% COLA should increase the average monthly benefit to just under $1,485—a ~$24 monthly increase.
It is unlikely that $24 will allow you to purchase part of one of the most populated islands in the world—but it may help cover the next increase in your cable bill that Charter Spectrum charges you.
Senior Vice President - Financial Advisor