When will you start drawing from your social security? It’s an important question, and waiting just a few years can make a big difference.


Older Americans already struggling financially amid the COVID-19 pandemic probably won’t find much solace in their Social Security checks next year.

The 68 million people – including retirees, as well as disabled people and others – who rely on Social Security are likely to receive a 1.3% cost-of-living adjustment next year because of paltry inflation, according to an estimate by the Senior Citizens League, an advocacy group. For the average retiree who got a check of $1,517 this year, that would mean an additional $19.70 a month.

“It makes people have to take more out of savings,” says Mary Johnson, a policy analyst for the Senior Citizen League who releases an estimate ahead of next month’s official government figure. “Other people who don’t have savings will go into debt. Many may go into poverty.”

A 1.3% COLA would be among the smallest ever and slightly below the 1.4% average over the past decade, a period of unusually low inflation, according to the Senior Citizens League. And it would be less than half the 3% average bump in the previous decade. This year’s increase was 1.6%, which boosted the average retiree’s monthly check by $23.40.

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Nearly 43 million beneficiaries could see their cost-of-living increase effectively wiped out because of increases in premiums for Medicare Part B, which are automatically deducted from many Social Security checks. For others, the Medicare offset could make any COLA benefit marginal. Under a “hold harmless” provision, Medicare premium increases are generally adjusted so they don’t reduce Social Security benefits.

Johnson reckons the Medicare Part B premium could rise by a hefty $17.40 a month in 2021 because of large pandemic-related Medicare costs.

Next month, the Social Security Administration (SSA) will announce the official cost-of-living adjustment for 2021 based on average annual increases in the consumer price index for urban wage earners and clerical workers, or CPI-W, from July through September. The CPI-W largely reflects the broad CPI index that the Labor Department releases each month.

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Each year, Johnson projects the July-September data based on changes in the CPI-W through August. In May, she released a preliminary estimate of zero COLA next year, but that assumed oil and gasoline prices would continue to plummet. Instead, those costs have rebounded in recent months, pushing the COLA into positive territory, she says.

Annual inflation has been meager, with the CPI-W rising 1.4% over the past year, according to the Labor Department. But Johnson says the basket of goods that determines that index doesn’t reflect the spending patterns of seniors who buy less gasoline, electronics and other products that make up a large portion of younger workers’ spending. Seniors instead spend more on food, health care costs and other items that have seen sharp price increases during the pandemic.

Since 2000, prescription drug and Medicare Part B costs have more than tripled, homeowners insurance has jumped 174% and home heating oil costs have climbed 172%, according to figures compiled by the league.

During the crisis, 48% of seniors have gone without essentials such as food and face masks, according to a survey the league conducted over the summer. Forty-five percent said their retirement savings dropped significantly. And 19% put off filling one or more prescriptions due to price spikes caused by COVID-19-related shortages or supply chain disruptions.

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Over the past two decades, Social Security recipients have lost 30% of their buying power as COLAs increased a total 53% while the cost of goods and services typically purchased by retirees jumped nearly twice as much – 99.3%, according to the league.

Johnson has called for the SSA to base its COLA on a proposed index for the elderly called CPI-E that would put more weight on health, food and other expenditures.

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