Social Security COLA set to be largest in years
By Daniel Williams
If you are currently receiving Social Security, you are about to get a raise. According to the Senior Citizens League, the cost-of-living adjustment (COLA) for 2018 is forecasted to be about 2 percent, the biggest increase since 2012. Unfortunately, for many seniors, a significant portion of that increase will be eaten up by higher Medicare premiums. Still, next year’s increase will dwarf this year’s, which was a minuscule 0.3 percent, as well as that of 2016, when there was no increase at all.
The COLA is tied to the Consumer Price Index (CPI), which has been rising of late after a long period of stagnation. From 2013 to 2015, the CPI hovered somewhere around 1.5 percent, which resulted in lower COLAs for those years. But as most retirees are keenly aware, the COLA has been falling behind inflation for years, mostly due to steep inflation in healthcare costs. The Senior Citizens League found that Social Security recipients have lost nearly a third of their purchasing power since 2000. Even more troubling, they gave up 7 percent just in the 12 months ending in June 2017.
One way to combat the dwindling purchasing power of Social Security is to make sure you claim your benefit in the most strategic way possible. If you are at or nearing age 62, you may fare much better in the long run by delaying your first claim for benefits. Perhaps your spouse’s lifetime earnings were greater than yours. In that case, you may be able to claim a benefit based upon his or her earnings. There are several factors to consider before you file for benefits, so be sure to check out the benefit calculators on the Social Security Administration’s website (www.ssa.gov) before filing.