I will not keep you in doubt: social security checks will be 2.8% higher in 2019. This is good news for retirees, but there are some important things that every social security beneficiary needs to consider about the increase. These include the fact that some retirees do not see the full amount of the increase reflected in their checks, and the cause of the increase may indicate that pensioners are making no real progress towards financial security despite rising incomes.
How Social Security Sets Annual Growth
Each year, social security organizations assess the annual price changes for a variety of goods and services using the CPI for local contract workers and employees (CPI-W). , An inflation measure, the CPI-W is intended to represent the cost of living for the typical American employee.
Specifically, Social Security compares monthly CPI-W scores for the third quarter, with the third quarter coming from last year, which saw an increase in social security. If the CPI-W is higher than in this previous period, Social Security recipients will receive an increase equal to the percentage change in the index. This is referred to as Cost of Living Adjustment (COLA). If the CPI-W is lower than in the previous period, social security revenues remain unchanged compared to the previous year.
For example, the average CPI-W in the third quarter of 2017 was 2% higher than the CPI-W in the third quarter of 2016 (the last year a COLA was granted), so welfare recipients received a 2% increase in their income this year.
This year, the CPI-W increased even more. As can be seen in the following table, the average value in the third quarter of 2018 was 2.8% above the average of Q3 2017, meaning that social security recipients will increase by 2.8% from January onwards.
|Consumer price index for urban wage earners and clerical workers (CPI-W)|
|Year||Jul||Aug||Sep||Average||% YoY Change|
|2017||238,617  239,448||240,939||239,668|
Not too still upset
The increase is important because social security accounts for more than 50% of the pension income for about half of all married couples. Although the increase in social security contributions by 2.8% year on year is the largest, it will not add so much to the annual income of the average beneficiary.
As of August 2018, this shows the monthly statistical snapshot of Social Security the average retiree collects $ 1,415.94 monthly. This means that typical retirees only see their monthly check rise $ 39.64 and their annual profit increase $ 475.76. Do not get me wrong, no one will complain every year about an extra $ 500. But that's far from a life-changing boost.
There are also Medicare to consider. Many social security beneficiaries have paid their Medicare Part B premium directly out of their social insurance. Medicare premiums also increase every year, but their increase is not determined by the CPI-W. Instead, Medicare increases are dependent on health care costs, which in the past have grown far faster than prices for other goods and services, and that is, premium increases can deeply intervene in annual social security COLA benefits.