A recent Social Security Administration trustee’s report estimated that in 2017 Social Security beneficiaries, this includes those who receive retirement, disability and survivor’s benefits, can expect to see a 0.2 percent increase in their monthly payments. Obviously this is not news to jump for joy about.
The only concession is that at least it will not be like 2016 where there was no increase at all. Official word of the increase should come at some point in October, but it truly is a meager increase. Consider that the average person who receives a Social Security check gets about $1,341 per month, the 0.2 percent increase would equal $2.68 more per month and a total of $32.16 extra a year.
The formula Social Security uses to determine what the COLA (cost-of-living-adjustment) will be, or if there is any at all, is a calculation that was put in place back in 1972 known as the Consumer Price Index. The CPI measures price changes for common consumer goods and services and is heavily weighted toward gasoline prices. When the CPI shows that prices have gone up Social Security recipients receive a COLA increase, but when prices remain stagnate or decrease there is no increase in benefits. The problem with this formula is that gasoline prices have been decreasing and remain steady as of now, which is the major reason for no or very little COLA increase.
At the same time, other prices such as clothing, housing or even prescription medications have been increasing. The main purpose of the Social Security COLA increase was to protect the buying power of beneficiaries, but the Senior Citizens League estimated that seniors have lost about 23 percent of their buying power since 2000. It is clearly time to change how COLA is calculated. To learn more click here.
