The annual Social Security cost-of-living adjustment for 2019 could top 3% in 2019, which would be the largest increase in seven years, according to a new estimate released by The Senior Citizens League, a nonpartisan advocacy group representing more than 1 million retirees.
A 3% increase would boost the average Social Security benefit of $1,404 per month in 2018 by $42 per month next year and increase the maximum benefit of $2,788 per month for someone retiring at full retirement age in 2018 by about $85 per month in 2019.
The average and maximum Social Security benefits do not include delayed retirement credits. Social Security recipients who delay claiming benefits beyond full retirement age earn an additional 8% per year for every year they postpone benefits up to age 70.
A 3% COLA in 2019 would be the biggest annual hike since 2012, when Social Security benefits grew by 3.6%. This year the COLA was 2%, following a meager 0.3% increase in 2017 and no increase in 2016.
The COLA estimate for 2019 is based on consumer price index data through April. The unofficial estimate by The Senior Citizens League, although normally very reliable, could change depending on the results of the next several months of CPI data before the COLA is officially announced in October. Social Security COLAs are based on the increase in the CPI-W, which measures price inflation for urban workers, from the third quarter of the prior year (July, August and September) to the corresponding third quarter of the current year.
"After the past nine years of COLAs averaging just 1.2%, one would think that people living on Social Security would be dancing in the streets," said Mary Johnson, a policy analyst at The Senior Citizens League. "But in reality, retirees are experiencing cost increases in common household expenses that are growing several times faster than 3%."