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Social Security payments set for a modest increase in 2020

The rise is less than it's been in the past two years, but more than in other years since 2010.

Retirees getting Social Security checks can expect to see their payments increase by 1.6 percent next year.

The Social Security Administration announced the modest increase in payments on Thursday, which follows the cost-of-living adjustment (COLA) for 2020.

The amount is less of an increase than the 2.8 percent bump last year, and the 2 percent in 2018, but at least it's more than the 0 percent increase in 2010, 2011 and 2016.

On average, Social Security payments have risen 1.4 percent annually over the past 10 years.

It means that the average monthly payment to recipients will rise by $24-per-month, or $288 a year, per the Social Security Administration.

There are expected to be 63 million Social Security beneficiaries in the U.S. by Jan. 2020.

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CNBC reports that the cost of living adjustment is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers from the Bureau of Labor Statistics.

The most recent annual inflation rate from the Bureau of Labor Statistics was 1.7 percent for the 12 months up till the end of September 2019.

If retirees receive Social Security benefits as their sole source of income, they won't have to pay any taxes on it, as it will be below the $25,000 individual and $32,000 couple filing jointly threshold for income taxes.

If they have other sources of income that brings them over these thresholds however, this will make a portion of their Social Security liable for tax, with CNBC recommending they increase their voluntary withholding from other sources of income in order to avoid a nasty shock on tax return filing day.

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