Some Important News About Social Security

Filed under: Retirement

Each fall, the Social Security Administration releases an estimate of the cost of living adjustment (COLA) for the next year. Automatic cost of living adjustments have been set to occur since 1975, but very rarely do not occur due to a flat inflation rate. Now, for the third time in history, the Administration has announced that there will be no COLA for 2016 beneficiaries.

Why is there no COLA this year? Cost of living adjustments are tied to inflation, as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers. When the index detects inflation, or a rise in the cost of goods and services, Social Security payments are adjusted as a result. Since the index did not report inflation this year, the Administration decided not to increase the size of Social Security benefits checks.

What can I expect? If you’re already drawing Social Security benefits, your checks will remain at the same amount they have been for the past year. The average retired individual will receive $1,341 per month, and the average retired couple will receive $2,212 monthly in 2016. Of course, your exact benefits amount does depend upon your own work record and when you filed for your benefits.

If you haven’t yet claimed your Social Security benefits, remember that benefit amounts often rise from year to year. However, a cost of living adjustment is never guaranteed, since it is tied to inflation. Another thing to keep in mind is that even when the inflation rate remains flat, your own personal expenses might increase for one reason or another. Remember to plan for your own retirement, assuming that Social Security will serve as a supplement for retirement income. It was never meant to fund your entire retirement. If you plan adequately for your sunset years, then you’re less likely to be impacted when the Social Security Administration fails to raise benefit amounts.

Those of you who are retired, and are finding your budgets pinched by the lack of a COLA this year, might benefit from making changes to either your budget or your financial plan. Call our office to set up an appointment, and let us show you alternative ways to either slash your budget or increase your income stream in retirement.

This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency

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