The Social Security Administration has announced its cost-of-living adjustment (COLA) for 2020. Each year, federal benefit rates increase when the cost of living rises, as measured by the Department of Labor’s Consumer Price Index (CPI-W).

The CPI-W rises when inflation increases, making your cost of living go up. This means prices for goods and services, on average, are a little more expensive, so the COLA helps to offset these costs.

As a result, nearly 69 million Americans will see a 1.6 percent increase in their Social Security and SSI benefits in 2020.

January 2020 marks other changes that will happen based on the increase in the national average wage index. For example, the maximum amount of earnings subject to Social Security payroll tax, as well as the retirement earnings test exempt amount, will change in 2020. The monthly substantial gainful activity (SGA) amount will be $1,260 for a non-blind individual and $2,110 for a blind individual. The monthly earnings threshold for a trial work period (for those already receiving benefits) will change to $910.C

You can find more information about the 2020 COLA here.