If you’re receiving social security benefits, or expect to apply for them next year, you could receive a cost of living adjustment (COLA) for your Social Security income in 2018.
Inflation rates prompt the government to give cost of living adjustments. Over the last few years, these adjustments have been 1.7 percent or less, which is something at least, but doesn’t really make a big difference. Some experts, like The Senior Citizens League (TSCL) expect a 1.9 to 2.1 percent increase from SSA, if inflation rates hold steady.
Seniors living on a fixed income would welcome any increase. If the government grants the COLA next year, benefits will be at a six-year high, the highest since 2012. If the Social Security Administration decides to increase Social Security income in 2018, the agency would make the announcement in the fall of 2017.
TSCL says that any increase is welcome, but says that only new legislation will increase SSA benefits to a level that benefits seniors. That’s because the way SSA calculates the COLA puts seniors at a disadvantage. The COLA doesn’t factor in the rising costs that retirees are paying and the portion of their income being spent on buying things. In effect, seniors are still losing their buying power. TSCL says the COLA is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When the price index rises, the COLA rises, but it is based on younger workers and doesn’t factor in the spending pattern of seniors (age 62 and up). It also doesn’t facto in other rapidly growing costs that seniors incur, such as increases in Medicare Part B premiums, which have risen a whopping 195 percent in the last 15 years.
TSCL says that seniors need a more relevant COLA and a boost to benefits if they have any hopes of catching up where benefits equal expenditures. TSCL says the boost to benefits doesn’t have to be large; it can be modest but needs to be there to help people who are living longer and therefore are retired for a much longer period of time. Groups like TSCL are strong supporters for Congressional legislation that would do both.
If all of this has your head swimming, consider giving us a call. We can help you through the SSA benefits process to ensure that you get the Social Security income in 2018 that you deserve.