Each fall, Social Security beneficiaries anxiously await the news of a cost of living adjustment (COLA) on their checks. When COLA is issues (which it usually is, in most years), the slight increase in checks beginning in January helps seniors to cover rising costs of living.
Those planning for their eventual retirements should also pay attention to each year’s COLA announcement. Since Social Security will comprise part of your retirement income, it’s a good idea to know what to expect – both good and bad.
Unfortunately, we might be receiving bad news this fall. While nothing is official just yet, the Board of Trustees of the Social Security Trust Funds has announced that the COLA for 2017 will likely fall between 0 and 0.7 percent. This could mean that seniors won’t receive a benefits increase in January, for the second year in a row. In that case, those of you drawing benefits should begin making any necessary adjustments to your budgets now.
If you’re still planning for retirement, you probably aren’t quite as disappointed by this news, but you might still feel alarmed. The positive angle here is that you can take a lesson from from development, and channel your worries into extra-careful retirement planning. In particularly, we want to remind you of two things.
First, while you can’t control whether Social Security issues a COLA for any given year, you can work to maximize your own benefits as much as possible. Working up until your full retirement age will guarantee that you receive your full scheduled benefits (as opposed to retiring early, in which case your checks will be permanently reduced). If you’re married, you might also be able to utilize filing strategies that help both of you access more benefits.
Second, you should never depend upon Social Security as your primary form of retirement income. Plan for a stream of income that allows room in your budget, so that events like a disappointing COLA don’t impact your budget too deeply. It is also possible, in some cases, to establish a form of income that gradually increases along with your cost of living.
For more information on maxing out your Social Security benefits, give us a call. We can also show you strategies aimed at establishing a secure income, and help you plan for all aspects of retirement.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.