For Mark Roberts’ Use: The Social Security administration has announced that all benefits recipients will see a 1.7 percent increase in their monthly checks, beginning January 15, 2015. The increase is due to the program’s annual cost of living adjustment (COLA), which is tied to the Consumer Price Index. When prices of goods and services rise, COLA helps protect seniors on a fixed income from inflation.
The cost of living adjustment will affect more than 70 million retirees and disabled veterans, or more than one-fifth of the country. It amounts to about 20 dollars per month for the average Social Security recipient, and is the third year in a row that the cost of living adjustment has been calculated at less than 2 percent.
Luckily, although the cost of health care is on the rise, Medicare Part B premiums will remain the same for 2015 at 104.90 per month. Most seniors opt to have their Medicare Part B premiums deducted from their Social Security checks. Meanwhile, federal retirees face a 3.8 percent increase on their health insurance premiums next year, and premiums for other self-insured retirees may also rise.
Some skeptics believe this year’s cost of living adjustment is too low, and is not enough to cover inflated costs associated with health care, food, gas, and other essentials. While politicians continuously argue over changes to the Social Security system, retirees should take note of this year’s cost of living adjustment and plan ahead.
It’s important to remember that Social Security was never meant to entirely fund retirement, but should be seen as a supplement instead. Retirees who find that their monthly expenses exceed their income should talk to their financial advisors about ways to either trim their budgets or boost income. Those who have not yet retired should calculate expected expenses and income carefully, and talk to their advisors about the right time for retirement.