Congratulations! You Got A Social Security Increase. Now Here’s The Bad News.

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Congratulations! Here’s your monthly Social Security increase!

Here’s your raise!

Congratulations! If you are on Social Security, you’re getting a raise in 2017!

Now here’s the bad news. It’s only $5 a month.

You may have already heard that Social Security cost of living adjustments (COLAs) will be a little skimpy next year.

The increase, which is based on the prior year’s inflation, will be about 0.3% in 2017.

That means the average retiree will receive only about $5 extra per month.

(Of course, that’s better than the increase for 2016, which was $0!).

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Or one more of these each month?

And what it buys

To put your $5 per month increase into real terms, it will let you buy – each month – one extra coffee drink from your favorite barista, or perhaps one extra large sandwich at the neighborhood fast food chain.

But don’t forget about …

Before you get too excited, just remember that – for most people – Social Security benefits are taxable, so your $5 increase will get a haircut from applicable state and federal taxes.

Plus, an estimated 30% of all Medicare retirees do not benefit from the “hold harmless” rules that protect what they earn from Medicare premium increases. So even though their Social Security benefits may increase a few dollars, their Medicare premiums could go up $70 per month or more.

Overall, that moves them to the losing side of the equation.

 

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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