NEW YORK — The typical retiree’s monthly Social Security check will get only $3.92 bigger next year.
That amounts to an increase of just 0.3% — the smallest ever put in place to help cover higher prices.
That’s still an improvement from this year, when the lack of inflation kept benefits from increasing at all. The average retiree’s monthly benefit is currently $1,305.30.
Social Security benefits go to 66 million people, including retirees, widows, orphans and people with disabilities. The annual cost of living adjustment (COLA) was put in place in 1975.
Retirees’ benefits can be higher than average depending upon their earning history and how old they were when they began drawing checks. The maximum benefit today for someone retiring at full retirement age is $2,639 a month. Even that larger benefit check will grow by just $7.92 next year.
Of course, many retirees get smaller benefit checks and will see smaller increases than the average.
One is Millicent Graves, a 72-year-old retired veterinary technician from Williamsburg, Virginia. She said her benefit is $1,033 a month, meaning her increase will be only $3.10. Many of her costs have risen much more, including her supplemental medical insurance, which is going up $45 a month.
“A $2 or $3 increase doesn’t do anything at all to that,” she said. “Many of my expenses are going up five or 10 times that much. Fortunately, I have some investments. I don’t know how anybody who is living on just Social Security would deal with those increases.”
A drop in oil and gas prices has kept overall inflation in check in recent years. The benefits freeze in 2016 was the third time this decade that there has been no increase in benefits. The other years were 2010 and 2011.
Some have argued that the inflation reading used to calculate the adjustment is flawed because retirees typically do not drive as much as younger people who commute to work. So retirees don’t benefit as much from lower gas prices.
“Over the last five years, Social Security COLA’s have remained small or nonexistent,” said AARP. “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.”
Retirees also spend a bigger proportion of their money on health care, for which prices have risen faster than overall inflation.
“As prescription prices skyrocket and Medicare premiums and other health costs increase, many older Americans have understandable concerns,” said AARP.
At the same time, retirees are hurt by low interest rates because many depend on savings to cover at least part of their living expenses.
Are you a retiree living on Social Security? We want to know what the small raise in benefits next year will mean to you. Please email writer Chris Isidore.