For the second year in a row, people receiving Social Security should expect to see little or no increase in their Social Security checks in 2017; the increase ensures people’s checks keep pace with inflation, preventing their benefits from eroding. Any change to the amount of Social Security benefits people receive is based on the consumer price index.
The latest Social Security Trustees’ report forecasts a cost of living adjustment of 0.2 percent for next year or $2.60 on the average monthly benefit of slightly more than $1,300.
As it is, Congress should be expanding the Social Security benefit. $1,300 a month is not enough to meet many people’s retirement needs. It only replaces about 40 percent of a typical retirees’ pre-retirement income. Today, Social Security represents more than half the income of two-thirds of people 65 and older. More than half of all households in the U.S. have no retirement savings.
In 2016, there was no cost of living increase, so no increase in Social Security benefits. But, health care and prescription drug costs for older adults and people with disabilities are mounting, and they make up a far larger proportion of spending for people receiving Social Security benefits than are reflected in the basket of goods that are looked at to determine the cost of living adjustment. As a result, older adults effectively have seen a cut in their Social Security income.
Congress should be looking at a new way to calculate the cost of living adjustment (COLA) for Social Security benefits, a way that accurately reflects the increase in costs older adults and people with disabilities face. Instead of calculating the COLA and Social Security benefit increase based on cost increases for the basket of goods that wage earners are purchasing, the benefit increase should be calculated based on cost increases for the basket of goods that retirees are purchasing. Older adults spend about three times more than working people on health care products and medical care.
Here’s more from Just Care:
- Large Medicare premium increase projected in 2017
- What will your Social Security benefits be when you retire?
- Government should expand Social Security benefits
- Social Security: What to know before claiming benefits
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