Tiny Social Security COLA – Possible Medicare Premium Hike?

Retirees will get only a few dollars more per month in 2017.

Tiny Social Security COLA - Possible Medicare Premium Hike?

The average Social Security recipient will get a $5 raise next year.

Yes, a whopping $5 per month. In 2017, Social Security’s mean monthly benefit is projected to rise – from the current $1,355 – by this scant amount, all because of low yearly inflation measured by the federal government.1,3,4

Social Security cost-of-living adjustments are tied to changes in the CPI-W.

This is a version of the Consumer Price Index that measures inflation for urban wage earners and clerical workers.

If that seems a bit incongruous to you, it also does to many senior advocacy groups.

They would prefer that these cost-of-living adjustments be based on the CPI-E, a version of the CPI that tracks consumer costs for the elderly.1,2,3

The CPI-E gives more weight to increases in medical and housing costs than the CPI-W.

If Social Security COLAs were linked to the CPI-E, the thinking goes, they might be greater.

Data from the Bureau of Labor Statistics backs up this assertion, as healthcare costs alone advanced 5.1% in the 12 months ending in August.1,3

Medicare payments might jump for some seniors.

While most Social Security recipients will see all of their 2017 “raise” go toward covering Medicare Part B premiums, some may not.1,4

Federal law governing Social Security limits annual Medicare Part B premium increases for 70% of Social Security recipients, with the other 30% left to shoulder most of the burden.

Just who makes up that other 30%? Seniors who will be enrolling in Part B for the first time in 2017, Social Security recipients whose income already prompts them to pay higher Part B premiums, and people who currently receive Medicare benefits, but collect no Social Security.1,4

Those groups could see their Part B premiums rise 22% next year – $149 a month, according to the latest Medicare Trustees Report – unless the federal government acts fast.

In late 2015, a large premium increase was reduced when the U.S. Treasury loaned $7 billion to Medicare.1,4

The tiny 2017 Social Security COLA at least beats expectations.

Social Security’s Board of Trustees had forecast the mean monthly benefit to rise 0.2% in 2017, not even $3 a month for the average recipient. Monthly Social Security benefits have risen an average of 2.3% per year since 2000, even with no COLAs occurring in 2009, 2010, and 2016.1,3,4

 

Citations.

1 – time.com/money/4533881/social-security-2017-increase-cola-cost-of-living-adjustment/  [10/18/16]

2 – ssa.gov/oact/STATS/cpiw.html  [10/19/16]

3 – fool.com/retirement/2016/09/24/heres-why-your-social-security-check-is-hardly-goi.aspx  [9/24/16]

4 – usatoday.com/story/money/personalfinance/2016/10/18/social-security-cola-medicare-premiums-cost-of-living/92051378/  [10/18/16]

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Jeffrey Biro
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Jeffrey Biro

Jeff’s two passions in life are his family and the Phoenix Suns. He married his high school sweetheart immediately after college. He is a dutiful father to his 3 beautiful daughters.
Jeffrey Biro
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