Social Security Recipients May Receive a Raise in 2017Posted October 18, 2016 by Premier Disability Services, LLC® On Tuesday, the Social Security Administration will announce the annual cost-of-living adjustment (COLA) for retirement, disability, and survivor benefits, affecting nearly 66 million Americans who receive Social Security or Supplemental Security Income payments.
Beneficiaries received no cost-of-living increase in 2016 due to soft inflation in 2015, including a plunge in the cost of gasoline and other energy products that depressed broad consumer-price gauges. The price measure used to calculate the annual COLA, the Labor Department’s consumer-price index for urban wage earners and clerical workers (CPI-W), fell 0.4% in the third quarter of 2015 compared with one year earlier. That translated into no change in benefits for the third time since the 2007-09 recession.
An upward adjustment is expected for next year’s payments as U.S. inflation gradually firms. But under the law, adjustments are calculated from a base in the last year when benefits were raised. So when the Labor Department releases its September CPI report on Tuesday morning, the third-quarter average for the CPI-W will be compared with its level in 2014, not 2015, to determine the Social Security adjustment for 2017.
The likely result is a small increase in benefits. The Social Security trustees’ report released in June forecast a 0.2% increase for next year. The American Institute for Economic Research this week predicted an increase in the 0.2% to 0.5% range, which would be the smallest rise (aside from years with no increase at all) since automatic adjustments began in the mid-1970s. Social Security benefits increased by 1.7% in 2015, 1.5% in 2014 and 1.7% in 2013.
The average monthly Social Security benefit check is currently $1,238. “Our forecasted increase would add between $2 and $6 to the average Social Security payment, less than the increases beneficiaries have seen in most recent years,” wrote Max Gulker, a senior research fellow at AIER, on the nonprofit group’s website. But, he added, the “small increase is not necessarily bad news for beneficiaries, as it reflects extremely low inflation over the past year.”
By Thomas A. Klint of Premier Disability Services, LLC®