- The maximum monthly benefit for workers claiming at full retirement age will increase from $2,639 to $2,687.
- For all retirees, the average monthly benefit will increase from $1,355 to $1,360.
- For couples receiving benefits, the 0.3 percent COLA increase means the average monthly benefits will increase from $2,254 to $2,260.
- A widowed mother with two children will see average monthly benefits increase from $2,686 to $2,695.
- A single widow will see average benefits increase from $1,296 to $1,300.
- And a disabled worker with a spouse and one or more children will see average benefits increase from $1,990 to $1,996.
- For all disabled workers, the average monthly benefit will increase from $1,167 to $1,171.
Thursday, October 20, 2016
Social Security COLA 2017: Increase of 0.3 percent
Oct 18, 2016 | By Nick Thornton
Today, the Social Security Administration announced the 2017 Cost of Living Adjustment for beneficiaries will be 0.3 percent.
The COLA will take effect for more than 60 million Social Security beneficiaries beginning in January 2017.
Another 8 million Supplemental Security Income beneficiaries will see the COLA adjustment applied to checks beginning on December 30, 2016. SSI benefits are paid to qualifying low-income blind or disabled seniors, and some blind or disabled low-income adults and children.
The SSI program is separate from the Social Security Disability Insurance, and is funded through the Treasury Department, not the Social Security trust fund.
Some households spend more during certain years of retirement, a study says, while even those that spend less spend different...
Maximum taxable earnings increase
The SSA also announced the cap on income subject to Social Security tax will increase to $127,200 in 2017, up from this year’s limit of $118,500.
The earnings limit for workers younger than full retirement age will increase to $16,920, from $15,720 in 2016. For retirees claiming early benefits, $1 in benefits will be withheld for every $2 in earnings above that limit.
For people turning 66 in 2017, the earnings limit will increase to $44,880, from $41,880 in 2016. For the months prior to attaining full retirement age, $1 in benefits will be withheld for every $3 in earnings above the threshold.
There is no limit on earnings once retirees hit full retirement age.
Not much of a bump for Social Security cost-of-living adjustments
What does 0.3 percent look like? The SSA broke down what the impact of the 0.3 percent COLA will mean for different beneficiaries’ monthly checks:
Read on for industry and advocacy reactions:
COLA increase: Glass half empty
Early reactions to the COLA increase elicited varying takes on the small upward adjustment in benefits.
Cathy Weatherford, president and CEO of the Insured Retirement Institute, noted that 2017 will mark the seventh time in the last eight years that the COLA adjustment has been below 2 percent. There was no adjustment for three of those years.
“Unfortunately, for the average retiree this increase will only amount to a few dollars,” said Weatherford in a statement. “We know from our annual study on the Baby Boomer generation that six in 10 boomers are expecting Social Security to be a major source of income in retirement. Given what we know, it will be imperative for boomers and subsequent generations to develop plans now to ensure they have sufficient savings to supplement Social Security benefits to meet their needs in retirement.”
COLA increase: Glass half full
The 2017 COLA will be the lowest non-zero increase since automatic adjustments pegged to inflation began in 1975. At no other time since has the adjustment been below 1 percent.
But the small adjustment is owed to the fact that inflation has been negligible, meaning beneficiaries have not needed upward adjustments to maintain the purchasing power of their benefits, noted analysts from the Committee for a Responsible Federal Budget, a non-partisan think tank that lobbies for sound fiscal policy.
CRFB and other policy experts have been critical of how Social Security COLAs are measured.
The Social Security Administration uses averages from the Consumer Price Index for Urban Wage Earners and Clerical Workers, or the CPI-W, to assess COLA increases.
CRFB and other critics of that measurement say the CPI-W “generally overstates inflation” because it only looks at the cost of a small sample of goods, and does not account for how consumers adjust purchasing based on relative prices of similar products.
The Consumer Price Index for All Urban Consumers, or CPI-U, is used to gauge inflation by the IRS and for other federal programs. CPI-U measures consumption for 87 percent of the population, versus 32 percent for the CPI-W, according to CRFB.
Another measurement, the chained CPI, is widely considered a more accurate gauge of inflation than both the CPI-W and CPI-U, according to the CRFB.
Annual inflation measured by the chained CPI is generally 0.25 to 0.30 percentage points lower than the CPI-W measurement.
“Deliberately using a flawed measure of inflation to provide all retirees with extra benefits beyond what is warranted is poor policy,” says CRFB analysts in a blog post.http://www.benefitspro.com/2016/10/18/social-security-cola-2017-increase-of-03-percent?kw=Social+Security+COLA+2017%3A+Increase+of+0.3+percent&et=editorial&bu=BenefitsPRO&cn=20161020&src=EMC-Email_editorial&pt=Retirement+Advisor+PRO&page_all=1