Retirees on Social Security are likely to bank a pay raise next year for the first time since 2015 -- though many won’t even notice the cost-of-living increase in their benefits, which will amount to a cup of coffee or two for the average recipient.
The American Institute for Economic Research forecasts an increase of 0.2 percent to 0.5 percent, or $2 to $6 on the average payment, making it the stingiest increase since the Social Security Administration began making annual adjustments in the 1970s.
There were no increases at all in 2010, 2011 and 2016.
The upshot of the small cost-of-living adjustment is its rationale -- unusually low inflation, which means retiree dollars are stretching farther on some expenses. For instance: Since August, energy costs (read: gas prices) have dropped 9.2 percent, according to data from the Bureau of Labor Statistics.
But for retirees who don’t drive or don’t drive much, fuel savings likely will be eclipsed by, say, the rise in the cost of health-care services of 5.1 percent over the same period.
Meantime, wealthy retirees and people working past retirement age are likely to see their Social Security benefits fall, as fees deducted for Medicare Part B continue to rise faster than cost-of-living adjustments. (Annual increases in Medicare premiums are capped for 70 percent of Social Security recipients to prevent Social Security check amounts from falling year to year.)
AIER, a nonpartisan think tank, said it was 90 percent confident in its cost-of-living increase projection, which the government will make official on Oct. 18.
Since 2011 Social Security has been paying out more in benefits than it collects from taxes, dunless benefits are cut or payroll taxes are raised or both.