Tiny Social Security COLA, Possible Medicare Premium Hike

Retirees will get only a few dollars more per month in 2017.  

Provided by Bob Medler, CRPC, CMFC, AIF®

The average Social Security recipient will get a $5 raise next year. Yes, a whopping $5 per month. In 2017, Social Security’s mean monthly benefit is projected to rise – from the current $1,355 – by this scant amount, all because of low yearly inflation measured by the federal government.1,3,4

Social Security cost-of-living adjustments are tied to changes in the CPI-W. This is a version of the Consumer Price Index that measures inflation for urban wage earners and clerical workers. If that seems a bit incongruous to you, it also does to many senior advocacy groups. They would prefer that these cost-of-living adjustments be based on the CPI-E, a version of the CPI that tracks consumer costs for the elderly.1,2,3

The CPI-E gives more weight to increases in medical and housing costs than the CPI-W. If Social Security COLAs were linked to the CPI-E, the thinking goes, they might be greater. Data from the Bureau of Labor Statistics backs up this assertion, as healthcare costs alone advanced 5.1% in the 12 months ending in August.1,3

Medicare payments might jump for some seniors. While most Social Security recipients will see all of their 2017 “raise” go toward covering Medicare Part B premiums, some may not.1,4

Federal law governing Social Security limits annual Medicare Part B premium increases for 70% of Social Security recipients, with the other 30% left to shoulder most of the burden. Just who makes up that other 30%? Seniors who will be enrolling in Part B for the first time in 2017, Social Security recipients whose income already prompts them to pay higher Part B premiums, and people who currently receive Medicare benefits, but collect no Social Security.1,4

Those groups could see their Part B premiums rise 22% next year – $149 a month, according to the latest Medicare Trustees Report – unless the federal government acts fast. In late 2015, a large premium increase was reduced when the U.S. Treasury loaned $7 billion to Medicare.1,4

The tiny 2017 Social Security COLA at least beats expectations. Social Security’s Board of Trustees had forecast the mean monthly benefit to rise 0.2% in 2017, not even $3 a month for the average recipient. Monthly Social Security benefits have risen an average of 2.3% per year since 2000, even with no COLAs occurring in 2009, 2010, and 2016.1,3,4


Robert Medler is a Registered Representative with and, securities are offered through LPL Financial, Member FINRA/SIPC CA Insurance License # 0C05523

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1 – time.com/money/4533881/social-security-2017-increase-cola-cost-of-living-adjustment/ [10/18/16]
2 – ssa.gov/oact/STATS/cpiw.html [10/19/16]
3 – fool.com/retirement/2016/09/24/heres-why-your-social-security-check-is-hardly-goi.aspx [9/24/16]
4 – usatoday.com/story/money/personalfinance/2016/10/18/social-security-cola-medicare-premiums-cost-of-living/92051378/ [10/18/16]