Social Security recipients will see a small increase in their monthly benefit next year — just don’t go toasting to that. The increase is so small that it might not cover a glass of alcohol.
The U.S. Social Security Administration announced Tuesday that beneficiaries will receive a 0.3 percent cost-of-living adjustment, or COLA, this year. The change will take effect in January.
As a result, a retired person who currently receives $1,355 per month in benefits would receive an estimated $5 more per month starting in January. A couple who currently receives $2,254 per month would receive $6 more.
This is the smallest COLA going all the way back to 1975, with the exception of three years during which Social Security beneficiaries received no adjustment. The prior five years’ worth of COLAs were:
- 2015 — 0 percent (no adjustment)
- 2014 — 1.7 percent increase
- 2013 — 1.5 percent increase
- 2012 — 1.7 percent increase
- 2011 — 3.6 percent increase
Until now, the smallest positive COLA going back to 1975 was the 1.3 percent increase made in 1986. Prior to 1975, Social Security increases were determined by legislation rather than inflation.
By law, the monthly Social Security benefits rate now increases every year that the federal government’s Consumer Price Index rises.
In a Wall Street Journal report Tuesday, AARP chief executive Jo Ann Jenkins describes recent years’ COLAs as “small or nonexistent.”
The latest increase of 0.3 percent, Jenkins added, “doesn’t offer much help to the millions of families who depend on their Social Security benefits.”
Another Social Security change that will take effect in January impacts workers rather than retirees. The maximum amount of workers’ earnings subject to the Social Security tax will increase from $118,500 to $127,200.
The change is a result of an increase in average wages. According to the Social Security Administration, this change will affect about 12 million of the estimated 73 million workers who will pay Social Security taxes in 2017.
If you have yet to start receiving your Social Security benefits, be sure to first check out “Maximize Your Social Security” to learn how you can obtain a personalized report on the best way to claim benefits.
How do you feel about these changes in Social Security benefits and taxes? Let us know by leaving a comment below or over on our Facebook page.
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