(Image: Shutterstock)
Social Security recipients should see a 1.3% cost-of-living adjustment in 2021, smaller than the 2020 COLA, according to the Senior Citizens League.
This comes several months after the lobbying group expected falling oil prices to zero out the COLA for 2021. But in July, it updated its Social Security COLA estimate to a 1.1% increase as prices rose for gas and some other items.
Recommended For You
The official COLA is set to be announced by the Social Security Administration on Oct. 13. It was 1.6% in 2020.
"Our forecast is based on Consumer Price Index data through August, and there is still one more month of … data to come in before we get the official announcement in October," said Mary Johnson, Social Security policy analyst for the Senior Citizens League, in a statement.
The inflation rate from May to August points to the COLA rising as much as 1.4%. However, price changes from June through August in combination with a downward trend in gas prices "seem to indicate it will probably be 1.3%," Johnson explained.
The advocacy group says there's a 5% chance the 2021 COLA will top 1.3% and a 15% likelihood it will be lower.
If the COLA turns out to be 1.3%, it would be the fifth time since 2010 that seniors will see a very low, or even no, annual inflation adjustment. The COLA was zero in 2010, 2011 and 2016, and it was 0.3% in 2017.
"This is more evidence that our system to adjust benefits for inflation is broken," according to Johnson.
Over the past decade, annual COLAs have averaged 1.4% — less than half the 3% COLA average from 1999 to 2009.
Currently, the adjustment is tied to the percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which reflects prices paid by working adults under age 62 and gives greater weight to items like gas and electronics.
This measure gives less weight to housing and medical expenses, which are the biggest areas of spending for older consumers, the Senior Citizens League says. It also includes Medicare premiums, which have been rising in price in recent years.
The U.S. Government Accountability Office, which reviewed the measurements this summer, concluded that the U.S. Bureau of Labor Statistics "faces accuracy, timeliness and relevancy challenges developing consumer price indexes (CPI) for subpopulations of blue-collar workers and older Americans."
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Janet Levaux
Editor-in-Chief Janet Levaux has covered the financial markets since 1991, with a focus on financial advisors since 2005. After graduating from Yale and the Johns Hopkins School of Advanced International Studies (SAIS), where she studied global economics, Janet worked as a freelance financial and business writer in Japan, and then as a reporter and editor for Investor's Business Daily and the Bay Area News Group in California. She earned an MBA in 2007 and since then has helped lead key ThinkAdvisor projects like its Neal-Award winning reporting on Ken Fisher, Luminaries awards program and Women in Wealth newsletter.
