By Rosanne Rogé, CFP®, CSA, RFGsm
If you have noticed a small dip in your Social Security payments recently, you are not alone. Based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the recipients of Social Security Benefits will be receiving a small Cost of Living Adjustment (COLA) in the amount of 0.3% for 2017. This increase will see the average monthly benefit for retirees increase to $1,360 from $1,355 – or a $5.00 increase.
Even though this amount is small, it is better than 0% – which is what happened in 2016 because of low inflation. Earnings income subject to Social Security tax will increase to $127,200 from the current $118,500.
The CPI-W is the base for the annual increases in Social Security Benefits, and is contingent on the cost of goods and services, such as food, housing, transportation, and energy. If consumer prices increase, Social Security recipients automatically get an increase in their payments, starting in January 2017.
We have been receiving questions from clients as to why they are receiving less in their social security payments. In addition to increased Medicare costs, distributions beyond the normal from IRA accounts are putting clients into a higher tax bracket, exceeding certain income tax thresholds, therefore reducing their social security payments further.
Please feel free to contact us at 631.218.0077 or at firstname.lastname@example.org with any questions or concerns.