Starting in January, recipients of Social Security benefits will have a reason to celebrate: Checks will be increasing by 2.8 percent, putting a bit more money in your pocket each month.
Each fall, the Social Security Administration analyzes rates of inflation for the current year, and issues cost-of-living adjustments (COLA) to monthly checks accordingly. These adjustments are certainly not guaranteed, as we’ve discovered in years of very low to zero inflation. Sometimes the increases are not issued, and at other times they are disappointingly small. In fact, the COLA for 2019 is the largest we’ve seen since 2012.
For those receiving the average Social Security benefit of $1,400 per month, the 2.8 percent increase will amount to an extra 39 dollars per month. Rates for Medicare Part B premiums, which are deducted from Social Security checks, have not yet been announced. If they also rise, some retirees might not see much extra cash in their checks.
Cost of Living Adjustments are determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. This index tracks the prices of various goods and services to arrive at an approximate inflation figure each quarter of the year.
Some retiree and senior advocacy groups say that the CPI-W is not the best measure of inflation for retirees, however, because the index does not account for the largest expense faced by most retirees. The price of healthcare continues to rise at a much faster rate than overall inflation, cutting into the buying power of those living on fixed incomes. But for now, this is how our system works.
Managing your healthcare expenses is more important now than ever, and you have the opportunity to reevaluate those expenses each year during Medicare’s Annual Election Period. From October 15 through December 7, you can compare different Medicare plans. Take the time to shop around, and locate a plan that best provides for your healthcare needs while accommodating your budget.