Social Security Beneficiaries To Receive Highest Increase in 6 Years

 Social Security beneficiaries may receive increased payment by next year.

According to the trustees, the cost-of-living adjustment (COLA) of 2.2 percent, which is the highest so far since 2011, will take effect next year, but will not be announced until October.

With the increase, the average retired worker who is receiving a Social Security benefit amount of $1,360 may get almost $30 per month. This is a big increase compared to the 0.3 percent adjustment in 2017, and in 2016 when there was no COLA made.

However, for several Social Security beneficiaries, increased Medicare premiums will eat at the cost-of-living raise. Medicare Part B premiums are deducted from the benefits, and the effect of the premiums on the total benefits may vary. This is because of the “hold harmless” provision in Social Security,

Cost-of-living adjustments for Social Security beneficiaries were created to make sure that the purchasing power of the benefits will not be eroded by inflation. COLAs  are determined through an automatic formula based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers. If there is no increase, there will be no COLA. Between the years 2013 and 2015, COLAs were kept in the 1.5 percent level.

One of the factors that are keeping cost-of-living adjustments low is weak inflation. COLAs were generally stingy, but the next year will see generous COLAs.

However, for most Social Security beneficiaries, it is difficult to keep up with rising inflation with the COLA formula. According to a study by the Senior Citizen’s League, Social Security beneficiaries have lost about one-third of their buying power since the year 2000, and have already lost 7 percent in the past 12 months.

About 61 million Americans are receiving Social Security benefits. However, the trust fund is projected to run out by the year 2034, which is the same projection as in 2016. But according to the Social Security Board of Trustees, the solvency of funds has improved.

If no solution is presented by 2034 to save the Social Security fund, the benefits received will be cut. Social Security also said that the fund only has enough to cover 77 percent of the benefits.

Nancy Berryill, acting commissioner of Social Security, is encouraging the public to engage in a national dialogue with the goal of strengthening the Social Security fund.

The Social Security disability fund is said to be in a much better state than the combined reserves and the fund’s lifeline has extended to until 2028, against the 2016 estimate of 2023. The Medicare trust fund is expected to be depleted by 2029, compared to the forecast last year of 2028.

The combined trust funds increased to a total of $2.85 trillion, with an increase of $35 billion in 2016. The fund is projected to continue growing through 2021. However, officials said that the total annual cost of the Social Security program is expected to exceed the income starting 2022.

In 2016, the program has paid a total of $911 billion in benefits.