Knowledge is Retirement Power
For 2021, the Social Security Administration (SSA) is paying out a Cost-of-Living Adjustment (COLA) of 1.3%. This amounts to about $20 more a month in benefits for the average retired worker and $33 more a month for a typical retired couple, according to SSA estimates. In planning for your retirement income, it’s important to note that any COLA adjustment from the SSA can vary each year and is not guaranteed. For reference, here are the SSA’s Cost-of-Living Adjustments in effect for benefits paid during the last five years:
Year COLA
2020 1.3%
2019 1.6%
2018 2.8%
2017 2.0%
2016 0.3%
Q&A
I’m in my mid-20s and I’m not sure how to prioritize my savings goals. Should I put most of it in my 401(k), my emergency fund or toward paying off credit card debt and student loans?
If your 401(k) offers an employer match, you may want to consider contributing enough to get all of those matching funds. It’s basically “free money.” You should then review the interest rates on your credit card debt and student loans. Consider prioritizing the payments on your high-interest debt. Finally, even as you address these priorities, it’s wise to build up a cash reserve for any planned or unplanned expenses. Even if you save a small amount each week or month, it will add up and provide a safety cushion if there’s an emergency so you don’t need to borrow money or increase any credit card debt you may already have.