Social Security is the primary means of financial support for tens of millions of older Americans. One of the best features of Social Security is that the monthly payments it makes take inflation into account, and so at the beginning of each year, recipients typically get larger checks from Social Security.

Those receiving Social Security got a nice boost at the beginning of 2019, with the 2.8% increase in their checks being the largest adjustment they'd seen since 2012. However, the final numbers are in for the coming year, and 2020's increase won't be as big as 2019's -- working out to just $23 for the typical person receiving Social Security retirement benefits.

How we got to $23

The numbers that go into the calculation for Social Security's annual adjustment to benefit payments come from the summer months. Every month, the Labor Department's Bureau of Labor Statistics released the latest reading for the CPI-W index. To come up with the yearly adjustment, the Social Security Administration looks at the average of the readings for the three months from July to September. It compares that average to the same average from the previous year. The percentage increase, rounded to the nearest tenth of a percentage point, becomes the cost-of-living adjustment for the subsequent year.

Social Security card embedded in spread-out money.

Image source: Getty Images.

The three-month average for 2018 was 246.352, and the last missing piece of the puzzle for 2019 came in on Thursday with the September figure of 250.251. That made this year's three-month average 250.200. Divide 250.200 by 246.352, and you get 1.56%, which was rounded up to 1.6%.

The 1.6% increase obviously depends on how big your Social Security benefit. But for the average recipient of retirement benefits who's getting $1,427 per month from Social Security, the 1.6% boost will add $23.

What various Social Security recipients are likely to see

However, a lot of what goes into the cost-of-living increase will depend on exactly what kind of benefit you get. Below are some of the most common benefits and their current averages along with the expected increases in 2020.

Type of Recipient

Average Benefit

Expected Benefit Increase in 2020

Retired worker



Spouse of retired worker



Child of retired worker



Nondisabled widow/widower



Child of deceased worker



Disabled worker



Spouse of disabled worker



Data source: SSA.

The size of the typical benefit varies greatly depending on what your relationship is to the worker whose earnings record makes you eligible. Retirees themselves tend to get larger benefits than spouses, because spousal benefits are typically based on an amount that's 50% of the worker's baseline benefit. Surviving widows and widowers get a benefit that's comparable to what the deceased spouse received prior to death, but disability benefits tend to be lower than retirement benefits. In both cases, family members typically get considerably less than the workers themselves.

Expect a tougher 2020 ahead

For those who got used to the bigger increases they received at the beginning of 2019, the final figures for the 2020 Social Security cost-of-living adjustment will be disappointing. It's hard for current recipients to do much financial planning to improve their situation at this point in their lives. For those who are still in the workplace, however, the latest numbers are a warning that makes it clear how important it is to set aside savings of your own toward retirement.