Social Security Checks Gets 2% Boost Next Year

Things are getting rosy for millions of Americans who are qualified to receive Social Security benefits.  Starting in 2018, the once-a-month benefits pay-out gets a 2% boost, which aims to offset rising cost of basic goods, rent, and healthcare.

The annual cost-of-living adjustment (COLA) was introduced by the U.S. Congress in 1975 and it is based on the measure of consumer prices generated by the Bureau of Labor Statistics. This makes it possible for the government to automatically implement Social Security increases. About 61 million Social Security beneficiaries will benefit from this adjustment, with an additional 8 million receiving Supplement Security Income benefits. President Donald Trump cannot be credited for this decision because it is not part of his jurisdiction. However, heads of state are often charged with influencing its enactment.

Although the majority choose to look at the bright side, this update also has several undesirable effects. Here are its pros and cons:

Pros

• The government announced that at the start of next year, millions of Social Security recipients will get a 2% increase in their monthly benefits in order to mitigate the expected rise in the cost of living.  This means that on the average, there will be an additional amount of $27 on their monthly checks or an extra $329 annually.  The country has not received such a huge increase since 2012.  When Harvey and Irma, two powerful hurricanes, hit the US mainland this year, gas prices escalated, which led to the decision to give additional monthly benefits to about 61 million Americans.

• Social Security disability benefits will also increase by $10 each month, which benefits 10 million eligible Americans.  There will be an additional monthly pay-out of $20 for beneficiaries who are categorized as legally blind.

• There will be a huge rise in the maximum amount of monthly Social Security checks for recipients who have reached full retirement age. Starting at the beginning of 2018, eligible retirees will receive an additional amount of $101 per month, which sums up to $1,212 annually. There are currently 1 in 10 Americans whose income qualifies them for this benefit.

Cons

• If the payout increases, then it follows that the pay-in also escalates. This means that the current 12 million-strong American workforce will pay more Social Security tax because of this decision.    

• The additional amount may not be enough to cover rising prices of prescription medicine, housing costs, and food. Many are worried that these current expenses are increasing quicker than the inflation rate.

• Eligibility for full Social Security benefits will increase by two months. When this is implemented in 2018, full retirement age will come two months later. Current full retirement age is 66 years and 2 months old. Come 2018, beneficiaries will not receive 100% of their benefits until they are 66 years and 4 months old.  It may only be a two-month difference, but this has repercussions for retirees because Social Security benefits are their major source of income, representing an average of 33% of their monthly earnings.