Americans who receive Social Security benefits will see a 1.3% cost-of-living adjustment in 2021, down from the 1.6% they received for 2020, the government said on Tuesday.
The 1.3% COLA will benefit close to 70 million Americans, the Social Security Administration said.
The agency bases its cost-of-living increase on the Labor Department’s consumer-price index for urban wage earners and clerical workers.
This translates to an estimated average monthly increase of $20 a month, to $1,543 from $1,523 for retired Americans.
In a statement, AARP Chief Executive Jo Ann Jenkins called the cost-of-living adjustment “modest.”
But she added that the “guaranteed benefits provided by Social Security and the COLA increase are more crucial than ever as millions of Americans continue to face the one-two punch of the coronavirus’s health and economic consequences.”
Other groups more sharply criticized the size of the COLA.
"People who have been receiving benefits for 12 years or longer have experienced an unprecedented series of extremely low cost-of-living adjustments,” said Mary Johnson, a Social Security policy analyst for the Senior Citizens League, in a statement.
“The members of the Alliance for Retired Americans are disappointed and angry that 64 million Social Security beneficiaries will receive a paltry 1.3% benefit increase in 2021," said Richard Fiesta, executive director of the Alliance for Retired Americans, in a statement.
"While any COLA is better than nothing, 1.3% is not nearly enough to keep up with the escalating cost of prescription drugs and other expenses seniors have to spend their money on," Fiesta added.
More than 64 million recipients of Social Security will receive the additional payments starting in January.
Another 8 million Americans, who are part of the Supplemental Security Income scheme, will receive additional payments on Dec. 31. Some people receive both benefits.
The maximum amount of wages taxed for Social Security purposes will be $142,800 in 2021, up 3.7% from $137,700 in 2020.