Last October, the government shutdown dominated headlines as legislators bickered over passing bills to fund the government as a way to exercise their political muscles. This year, the economy’s growth (even though a slight stock market decline has investors concerned) has tabled any discussion about funding bills.
With that, the cost of living adjustment (COLA) was recently announced by the Social Security Administration (SSA). According to ABC News, the 1.7 percent increase will be the third straight of historically small increases, and the seventh time that a COLA has been less than two percent. Next year’s increase will amount to about $20 more per month for most benefits recipients.
The adjustment will apply to 4 million disabled veterans, 8 million who receive Supplemental Security Income, as well as 2.5 retirees from the federal government. With the increase, the average benefit will amount to about $1,192.
Cost of living increases were mandated by law in 1975 so that people who receive Social Security benefits as their sole source of income could maintain buying power to survive cost increases caused by inflation. COLA increases are based on changes in the Consumer Price Index for Urban Wage Earners, which is a broad measure of consumer prices and measures changes for food, housing, clothing, energy and medical care; among other things that consumers regularly consumed.
While a small increase is theoretically better than no increase at all, those who rely solely on Social Security benefits may feel that the increase in benefits may not help at all. While gas prices are down (for now), other costs are up, including prescription medicines.