Social Security benefits will get a slight 0.3% increase next year, up from zero this year.
The Social Security Administration announced Tuesday that the cost-of-living adjustment will see the average monthly benefit for retirees go up to a measly $1,360 from $1,355 starting in January next year.
The announcement doesn't come as a shock since there was no automatic adjustment in 2016 due to low inflation. It is the fourth consecutive year in which COLA increases fell below 2%.
Earnings income subject to the Social Security tax also will increase to $127,200 from $118,500. The Social Security Administration said this would mean 12 million workers will pay more due to the increase in the taxable amount. The tax rate remains unchanged.
Supplemental Security Income payments also will increase 0.3% beginning in December this year, bumping up the average monthly payout to $735 from $733 for an individual, and to $1,103 from $1,100 for a couple.
|Before COLA||After COLA||Change|
|All retired workers||$1,355||$1,360||$5|
|Aged couple, both receiving benefits||$2,254||$2,260||$6|
|Widowed mother and two children||$2,686||$2,695||$9|
|Aged widow(er), alone||$1,296||$1,300||$4|
|Disabled worker, spouse and one or more children||$1,990||$1,996||$6|
|All disabled workers||$1,167||$1,171||$4|
The Senior Citizens League predicted the small increase last week, and has criticized the consumer price index used to calculate the COLA.
The agency bases COLA on the consumer price index for urban wage earners and clerical works known as CPI-W, calculated monthly by the Bureau of Labor Statistics. The Senior Citizens League and others have argued that the index is based on younger workers' spending habits, not the types of goods and services used by older, retired people.
Medicare premiums for some will increase much more than Social Security's COLA.
“For nearly one out of three beneficiaries, Medicare Part B premiums could increase more than 22%,” Jessie Gibbons, The Senior Citizens League's senior policy analyst, said in a statement last week.
Ms. Gibbons referred to the “hold harmless” rule that is estimated to protect about 70% of Medicare beneficiaries from rising premiums, leaving the remaining 30% to foot the bill. This means some retirees will see their Medicare Part B premium increase to $149 per month from $121.80, according to Medicare's 2016 annual report.
Retirees who fall into this category include new Medicare enrollees for 2017, those with income above $85,000 for individuals or $170,000 for couples, and Medicare Part B enrollees who don't receive Social Security benefits.
|Maximum taxable earning|
|Social Security (OASDI &mdash Social Security portion &mdash only)||$118,500||$127,200||$8,700|
|Medicare (HI &mdash Medicare portion &mdash only)||No limit||No limit||N/A|
|Quarter of coverage||$1,260||$1,300||$40|
|Retirement earnings test exempt amounts|
|Under full retirement age||$15,720/yr.||$16,920/yr.||$1,200/yr.|
|The year an individual reaches full retirement age||$41,880/yr.||$44,880/yr.||$3,000/yr.|
|Social Security disability thresholds|
|Substantial gainful activity non-blind||$1,130/mo.||$1,170/mo.||$40/mo.|
|Substantial gainful activity blind||$1,820/mo.||$1,950/mo.||$130/mo.|
|Trial work period||$810/mo.||$840/mo.||$30/mo.|
|Maximum Social Security benefit: Worker retiring at full retirement age||$2,639/mo.||$2,687/mo.||$48/mo.|
|SSI federal payment standard|
|SSI resources limits|
|SSI student exclusion|