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!).
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.