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Social Security Cost-of-Living Adjustment to Increase By 0.3% in 2017

Since 1975, the Social Security Administration has based any Social Security general benefit increases on whether there has been an increase in the overall cost of living. These general benefit increases are called a Cost-Of-Living Adjustment, also referred to as COLA. Social Security measures what that cost of living increase is by the Consumer Price Index. The Consumer Price Index is released by the Bureau of Labor Statistics of the U.S. Department of Labor and measures the average change over time in the price paid by urban households for a set of consumer goods and services. This seems simple enough; when we see enough of an increase in the cost of goods and services, Social Security Disability beneficiaries should see an increase in their benefits to help offset that increase, right? Wrong.

On October 18, 2016, Social Security announced that there will only be a 0.3% Cost-Of-Living adjustment.  Social Security beneficiaries will not see that increase in their checks until January 2017. More than 65 million Americans receive some type of Social Security benefit.  This is a significant percentage of our population that either rely on Social Security benefits for their entire income or to supplement their income. With an aging Baby Boomer generation, the number of Americans on Social Security Retirement is set to increase as the years go by.

This nominal cost of living increase should come as no surprise. Over the last 20 years, the cost of living increase has been over 2% only 4 times. You have to go all the way back to 1981 to find the last time the increase was greater than 10%. To put that in perspective, that is the same year the movie Raiders of the Lost Ark was released and the number 1 single on the Billboard Year-End Chart was “Bette Davis Eyes” by Kim Carnes. It is fair to say much has changed since Social Security beneficiaries saw a meaningful increase in their Social Security benefits.

To break it down into numbers, thanks to the 0.3% COLA increase, a beneficiary who receives $1,000 per month in Social Security benefits can enjoy an extra $3.00 per month. This equates to roughly 2 bottles of Coca Cola. To add to an already financially strained situation, Medicare premiums are set to rise in 2017 as well. This means that it is likely that Social Security beneficiaries will actually net less per month in 2017 with the increase in benefits than they did in 2016 with no increase at all.  In the end, this means less money in the pockets of the disabled and elderly for basic necessities such as shelter, medical care, and food.

This begs the question, will Congress act to change the way that COLA increases are determined? With rising health care costs and an aging population, more and more people rely on their Social Security benefits for survival. Although it is true that a 0.3% increase is better than no increase at all, many are calling for Congress to take a hard-look at how our country intends to provide for our elderly and disabled citizens in the coming years that depend on their Social Security benefits for a living income. To discuss your situation with one of our Memphis Social Security lawyers, call Nahon, Saharovich & Trotz at 1-800-LAW-4004.