The Social Security program was conceptualized as a supplement to retirement income, in a time that company pensions were popular and common. These days, fewer people enjoy a pension program, but Social Security stands as it was conceived. It is, and will be, an important income supplement for your retirement years. And, like any form of retirement income, it is helpful when your Social Security check increases to keep pace with inflation.
That’s exactly what will happen in January, when Social Security beneficiaries will receive a 2 percent cost of living adjustment (COLA). It isn’t a large increase by any means, but it is the largest “raise” beneficiaries have received since 2012. That’s because COLA is indexed to the inflation rate, and inflation has remained near zero for the past five years.
How much is 2 percent worth? For the average recipient, a two percent COLA will net them about 27 dollars a month. The average retiree benefit check will increase to $1,404 per month. Of course, your actual benefit could deviate significantly from the average, depending upon your earnings record or that of your spouse.
Any increase is good news, but hold off on celebrating for a bit longer. Medicare has yet to announce premium hikes for 2018, but with the cost of healthcare rising it seems likely Medicare rates might rise, too. Hopefully, the increase in Social Security benefits will cover any Medicare premium increases, helping to cushion that potential blow on your budget.
If you’re not already retired and receiving Social Security benefits, this news affects you as well. Staying informed on all of these issues can help you to plan a more stable retirement. One of the most important things to remember is that Social Security shouldn’t be relied upon to fund your entire retirement, and that cost of living adjustments are not guaranteed from one year to the next. Give us a call to discuss your retirement plan.