Social Security Announces Modest Cost of Living Adjustment for 2017
The Social Security Administration (SSA) has recently announced its planned Cost of Living Adjustment (COLA) for 2017, and the modest bump has left many retirees wondering how they’ll get by in an economy where prices keep going up.
For about half of the estimated 60 to 65 million recipients of Social Security benefits, the monthly checks constitute 50% or more of their household income. For a quarter of those over age 65, the benefits constitute 90% of their income. Even modest increases in the national cost of living have a big impact on Social Security recipients who are dependent on this fixed income. Recently, the SSA announced that the COLA for 2017 would be only 0.3%. Looked at another way, the average Social Security recipient will see their monthly benefit check rise by $5 from $1355 to $1360 a month.
The SSA determines the amount of the annual COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as the CPI-W. This index accounts only for spending habits and average costs among those who earn their income from working, but not those whose incomes come from pensions or Social Security. This means that the index does a poor job of measuring the rising costs of the sorts of things most often purchased by seniors, such as medical care. The Experimental Price Index for the Elderly, or CPI-E, was designed to provide a more accurate measure of cost of living increases for those 62 and older, but so far the SSA has declined to use this measure to calculate COLAs.
Not only will benefits rise by only a modest amount, but Medicare premiums are also slated to rise, especially for new enrollees, those collecting Medicare but not Social Security benefits, and those with higher incomes. Some 30% of all Medicare recipients can expect to see a 22% increase in Medicare Part B premiums in 2017, to an estimated $149 a month.
Planning ahead for your retirement will have a big impact on your long-term financial health. Consider how your current spending will affect future medical costs. Since your Medicare premiums are based on your tax returns from two years ago, ensure that you’re using retirement planning strategies and smart income sources that will have a minimal negative impact on your taxes. Speak with a New York estate planning attorney about whether you might benefit from asset protection trusts that could help you qualify for lower healthcare premiums.
If you would like to speak with a knowledgeable, experienced, and effective Hudson Valley estate planning attorney about your end-of-life legal issues, contact the wills & trusts attorneys at Rusk, Wadlin, Heppner & Martuscello for a consultation, in Marlboro at 845-236-4411, or in Kingston at 845-331-4100.