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Your monthly Social Security check will increase by a measly $5 next year.
This is because the 2017 Social Security COLA (cost-of-living adjustment) increase for SSI beneficiaries will be raised just 0.3%, reported the Social Security Administration (SSA) on Tuesday (Oct. 18).
That will bring the average monthly Social Security check up from $1,355 to $1,360.
The SSA's low COLA for 2017 couldn't come at a worse time, either...
Social Security COLA Remains Flat While Inflation Rises
The puny COLA increase will hit right as the Federal Reserve is targeting an inflation rate of 2% by the end of the year, so that it can raise interest rates again.
If the Fed's plan succeeds, senior SSI beneficiaries will feel the impact in their wallets...
You see, when inflation rates rise, so does the cost of goods and services. This is particularly dangerous for seniors next year because it means the price of these goods and services will outpace the rise in their incomes (a 2% inflation increase is 1.7% higher than a 0.3% COLA increase).
Seniors will be less able to afford goods and services (including healthcare) because of that widening gap.
Things haven't always been this way, of course. With the exception of 2010, 2011, and 2016, COLA increases after the Great Recession have been at least 1.5% or higher. Have a look:
- In 2009, beneficiaries saw a 5.8% bump.
- In 2012, they received a 3.6% increase.
- Both 2013 and 2015 saw a 1.7% rise.
- And in 2014, beneficiaries got a 1.5% bump.
So next year's paltry 0.3% increase pales indeed. Especially since Social Security Income recipients received no COLA increase whatsoever the year before, in 2016.
Now here's a breakdown of how the paltry 2017 COLA increase is also going to impact married recipients, widowed recipients, and all retirees combined...
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[CHART] How the Tiny 2017 Social Security COLA Increase Will Impact All SSI Beneficiaries
If the SSA's flat COLA increase for 2017 isn't bad enough news, then just look at how the metric is actually calculated.
- Money Morning: Social Security: Study Find Nearly Half of Baby Boomers Have No Retirement
- Money Morning: How Social Security Started
- Money Morning: The Biggest Reason Social Security Looks Like a Ponzi Scheme