(Image: Allison Bell/ALM)

If The Senior Citizens League is correct in its forecasts — and it has a strong record of that — roughly half of the Social Security cost-of-living adjustment (COLA) for 2020 for the average retiree will be wiped out by the increase in Medicare Part B premiums that year.

Based on its analysis of the recent Medicare Trustees Report, the league expects that the Medicare Part B premium, which pays for outpatient medical services and supplies such as doctor visits and medical equipment, will increase $8.80 per month, or 6.5%. It's forecasting a 1.2% COLA for Social Security, based on future projections of Consumer Price Index data available through March, which for the average beneficiary collecting $1,461 a month amounts to roughly $17.50.

For recipients collecting $735 or less in benefits, the Medicare Part B premium increase would wipe out their entire COLA.

"Roughly four million Social Security retirees with low benefits could be at risk of seeing no growth in their net Social Security benefits in 2020, after the deduction for rising Part B premiums using these projections," writes Mary Johnson, a Social Security and Medicare policy analyst for The Senior Citizens League.

They would have no additional funds to pay for rising costs for health care, housing or other necessities, which is an issue for a growing number of retirees.

The latest Franklin Templeton Retirement Income Strategies and Expectations (RISE) survey of roughly 2,000 adults 18 and older found that paying for health care expenses in retirement is the top expense concern among Americans regardless of age and the No. 1 retirement-related concern for adults over 65 years old.

The Social Security COLA is based on changes for the Consumer Price Index for Urban Wage and Earners and Clerical Workers, known as CPI-W, over the 12 months from the third quarter of one year through the third quarter of the following year. For 2020, it will be based on the change between the third quarter of 2018 and the third quarter of 2019 and announced in early to mid-October.

Last year the COLA was 2.8%, its highest since 2012. If the COLA for 2020 ends up near 1.2%, it will be the lowest since 2017, when the increase was a mere 0.3%. It has averaged 1.4% over the past decade, according to The Senior Citizens League.

The league, along with the Alliance for Retired Americans and the National Committee to Preserve Social Security and Medicare, supports changing the basis used to calculate the annual Social Security COLA from the CPI-W to the Consumer Price Index for Elderly Consumers (CPI-E). Pending legislation in the House, including the Fair COLA for Seniors and the Social Security 2100 Act, would link the COLA to the CPI-E.

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