Social Security benefits rising 2.8 percent, biggest hike in 7 years

Social Security will provide a 2.8 percent increase in benefits next year, marking the largest increase for retirees since 2012.

More than 62 million retirees will receive a bump in benefits starting in January, which would mean an extra $39 a month for the average retired worker. Another 8 million SSI beneficiaries, such as disabled workers, will receive increased payments starting on Dec. 31, the agency said. 

The adjustment is the largest since a 3.6 percent increase in 2012, with the current year's increase pegged at 2 percent. Inflation has been relatively low since 2012, although it's been ticking up in recent months because of higher costs for gas, housing and health care, among other items. Seniors count on the money to help keep pace with rising prices for health care and housing. 

By law, the annual cost-of-living adjustment, or COLA, is based on a broad official measure of consumer prices. Advocates for seniors claim the inflation index doesn't accurately capture costs faced by seniors, especially health care.

The COLA affects benefits for more than 70 million Americans, including Social Security recipients, disabled veterans and federal retirees.