Retired folks have something to celebrate a little, today, as social security benefits are increasing. But don’t plan to throw a weekend bash: the increase is only about $3.92, or 0.3 percent. Currently, the average monthly social security benefit for a retiree is $1,305.30.
This might be up from last year (when inflation kept social security from expanding at all) but it is still, obviously, not keeping pace with cost of living. And, of course, the annual cost of living adjustment (COLA) went into effect all the way back in 1975.
Now, each retiree’s benefits are different. The averages can be higher depending upon their overall earnings history and how old they were when they first started to receive checks. Today, the maximum retirement benefit—at full retirement age—is $2,639 per month. And this benefit will only grow by $7.92 next year.
This may seem somewhat unfair—not to increase the benefit when inflation kicks in—but some argue that the inflation reading used for calculating the adjustment is a flawed one as retirees do not generally drive as much as younger people who commute every day do. Thus, retirees do not benefit as much from lower gas prices.
According to AARP, though, “Over the last five years, Social Security COLA’s have remained small or nonexistent. Every cent can matter to beneficiaries and their families. After last year’s zero COLA, this year’s announcement doesn’t offer much help to the millions of families who depend on their Social Security benefits.”
At the same time, though, retirees also spend more of their money on health care—and the prices for this continue to rise faster than inflation.
As such, AARP goes on to say, “As prescription prices skyrocket and Medicare premiums and other health costs increase, many older Americans have understandable concerns.”
Indeed, the unequal portion of higher Medicare costs has a lot to do with how the government structures Social Security law, which caps premium increases for 70 percent of current recipients that are based on COLA amounts. This leaves, of course, the other 30 percent of people to pick up what’s left of the tab.