After two years without seeing an increase in their Social Security checks, more than 59 million retirees and other beneficiaries can expect a bump up in benefits next year.
The Social Security trustees’ annual report released this month estimates that the cost-of-living adjustment in next year’s checks will be 0.7 percent. The increase, which will be announced in October, could be higher, depending on where prices head in the coming months.
Still, experts say, retirees could see all or some of that raise eaten up by higher Medicare premiums.
News of the potential rise in benefits didn’t generate much excitement last week among seniors at the Allen Center in Federal Hill, although some retirees say they would be grateful for any boost.
“If it was $5 more, I would be happy,” Frances McCready, 69, a retired cashier, says about her monthly benefit. “I would dance a jig.”
The past two years have been “very bad,” says McCready, who receives $616 a month from Social Security and about $400 working as a paid volunteer with the Department of Aging.
She says she lives with her son and his wife, who help her pay her bills.
“If it wasn’t for them, no way in the world could I make it,” she says.
The Social Security trustees projected the cost-of-living adjustment using inflation assumptions from December. Since then, the price of gas has spiked upward and then pulled back. If fuel prices tick up again, beneficiaries could see as much as a 2 percent increase.
The actual cost-of-living increase will be based on the inflation rate in July, August and September, and how it compares with the rate during the third quarter of 2008 — the last time inflation caused the government to award an increase.
Back in the summer of 2008, gas prices skyrocketed and Social Security beneficiaries enjoyed a 5.8 percent increase the following year— the biggest jump since 1982. But fuel prices quickly plunged, and it’s taken this long for inflation to surpass that 2008 level.
In the two years that benefits remained flat, Medicare premiums also were frozen for the three-quarters of retirees with low to moderate incomes. But if their benefits go up, so will their Medicare premiums, which are taken out of Social Security checks.