We recently notified our readers that a cost of living adjustment (COLA) probably wouldn’t be happening for Social Security recipients this coming January. At the time, predictions held that inflation remained flat, and therefore the equation used to calculate benefits checks would not indicate the need for an increase.
Now, we have a tiny bit of good news: It looks like Social Security checks will be adjusted upward in January. However, the increase is currently projected to be 0.2 percent, much smaller than the COLA in most years. The final decision is based upon third-quarter numbers, which are yet to be released, but we should have a definitive answer in the coming weeks. As always, we will keep you updated.
Meanwhile, Medicare premiums are set to increase for some recipients. Those who don’t have Part B premiums deducted from their Social Security checks, and those who fall into the upper income brackets, will face a steep premium hike. According to the AARP, this accounts for about 30 percent of Medicare recipients. The remaining 70 percent will see only a tiny increase in their premiums, about $2.70 per month.
The bottom line here is that Social Security checks will increase by a tiny amount, and most Medicare premiums will stay relatively stable,. Meanwhile, a few of you will indeed pay much more for Medicare next year, but without a meaningful Social Security COLA to help offset the difference. It’s a good reminder that seniors can experience a rise in the cost of living even though the Consumer Price Index reports otherwise. You can’t count on a significant COLA every year, so solid preparation for retirement remains a high priority.
Call us to schedule an appointment, and we can discuss ways to manage rising medical expenses, and other costs of living, even when Social Security’s COLA is disappointing.
Portions of this article have been excerpted from “Social Security COLA Projected for 2017” by Eileen Ambrose and Patricia Barry, who not affiliated with LPL Financial.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.