The government announced today that social security benefits are set to go up by 1.7% next year, which will reflect an increase of about $20 per month for each individual recipient. The announcement was made when the government released the latest measure of consumer prices.
The average recipient receives about $1,192 in benefits per month. There are about 59 million retirees, disabled workers, spouses and children who receive benefits.
This marks the third year in a row the COLA (Cost of Living Adjustment) has increased by less than 2%, because Inflation has been relatively low in recent years. For example, the price of gasoline dropped over the past year, while the price of clothing went up less than 1%. However, the overall cost of food is up 3.1% from last year and the price of meat, fish and eggs is up by nearly a whopping 10%.
Medical care costs, which obviously heavily affect the elderly and disabled, are up 1.9% from last year.
Congress enacted the COLA in 1975 when inflation was high and there was pressure to regularly increase benefits. For the first 35 years, there were only three years in which benefits increased by less than 2%. However, the COLA has increased by less than 2% in five of the past six years.
Social Security is funded by a 12.4% payroll tax on the first $117,000 of a worker’s wages – one half of which is paid by the employer and the other half paid by the worker. Next year, the wage cap will increase to $118,500 according to Social Security.
The Medicare Part B premium, which covers outpatient care and is typically deducted from a recipient’s social security payments, is scheduled to stay the same next year at $104.90 per month.
The COLA also affects benefits for veterans, federal retirees, and SSI recipients.
This material should not be construed as legal advice for any particular fact situation, but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted.