Social Security benefits get small bump for 2017

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The annual Social Security benefit adjustment of 0.3 percent could be offset by Medicare premiums in many cases. (Photo: iStock)

The Social Security Administration announced monthly Social Security and Supplemental Security Income benefits will increase 0.3 percent next year.

The annual cost-of-living adjustment (COLA) is tied to the increase in the consumer price index determined by the U.S. Department of Labor’s Bureau of Labor Statistics. More than 60 million Social Security beneficiaries will receive the increase beginning in January 2017, while more than 8 million SSI beneficiaries will receive the COLA starting in December.

Other adjustments that take effect in January are based on the increase in average wages, including the maximum amount of earnings subject to the Social Security tax (taxable maximum) increasing to $127,200 from $118,500 in 2017. The SSA said about 12 million American workers will pay more next year because of the increase in the taxable maximum.

Maximum Social Security benefits for a worker retiring at full retirement age will increase slightly to $2,687 per month in 2017, from $2,639 per month in 2016. The estimated average monthly social security benefit payable starting in January is $1,360 for all retired workers, compared with $1,355 prior to the COLA. For an aged couple who are both receiving benefits, the estimated average monthly benefit will be $2,260, compared with $2,254 prior to the adjustment. An aged widow or widower will receive an average benefit of $1,300 per month, compared with $1,296 prior to the adjustment.

Disabled workers on average will receive a monthly benefit of $1,171 starting next year, up from $1,167.

The Washington-based Insured Retirement Institute released a statement calling the COLA scant, saying the annual adjustments have been minimal or nonexistent in seven of the past eight years, including three years with no COLA at all.

“Once again, Social Security recipients will receive only a small COLA in 2017,” said Cathy Weatherford, the institute’s president and CEO. “Unfortunately, for the average retiree this increase will only amount to a few dollars, and it is more than likely that beneficiaries will give it back in the form of higher Medicare Part B premiums, which typically are deducted from Social Security benefits.

“We know from our annual study on the baby boomer generation that nearly six in 10 boomers are expecting Social Security to be a major source of income in retirement,” Weatherford said in the statement. “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 and meet their needs in retirement. Retirement savers in need of professional assistance should consider consulting a trusted financial advisor who can help them develop their own holistic retirement plan.”

See also:

Social Security changes: What advisors need to know

20 Social Security tax facts you need to know

Clinton, Trump campaigns turn Social Security politics on its head

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Social Security benefits get small bump for 2017