The average Social Security recipient will receive a whopping $5 per month raise next year. In 2017, Social Security’s mean monthly benefit is projected to rise, from the current $1,355, by this scant amount because of low yearly inflation measured by the federal government.
Social Security cost-of-living adjustments (COLAs) are tied to changes in the CPI-W. The CPI-W is the Consumer Price Index (CPI) that measures inflation for urban wage earners and clerical workers. If that seems a bit incongruous to you, it also does to senior advocacy groups. They would prefer that these COLAs be based on the CPI-E, a version of the CPI that tracks consumer costs for the elderly.
The CPI-E gives more weight to increases in medical and housing costs than the CPI-W. If Social Security COLAs were linked to the CPI-E, the thinking goes, they might be greater. Data from the Bureau of Labor Statistics backs up this assertion, as healthcare costs alone advanced 5.1% in the 12 months ending in August 2016.
Medicare payments might jump for some seniors. While most Social Security recipients will see all of their 2017 “raise” go toward covering Medicare Part B premiums, some may not. Federal law governing Social Security limits annual Medicare Part B premium increases for 70% of Social Security recipients, with the other 30% left to shoulder most of the burden. Just who makes up that other 30%? Seniors who will be enrolling in Part B for the first time in 2017, Social Security recipients whose income already prompts them to pay higher Part B premiums, and people who currently receive Medicare benefits but collect no Social Security.
Those groups could see their Part B premiums rise 22% next year or $149 a month, according to the latest Medicare Trustees Report – unless the federal government acts fast. In late 2015, a large premium increase was reduced when the U.S. Treasury loaned $7 billion to Medicare.
The tiny 2017 Social Security COLA at least beats expectations. Social Security’s Board of Trustees had forecasted the mean monthly benefit to rise 0.2% in 2017, not even $3 a month for the average recipient. Monthly Social Security benefits have risen an average of 2.3% per year since 2000, even with no COLAs occurring in 2009, 2010, and 2016.