Statements | Client Login

Social Security Cost Of Living Adjustment 2017

December 13, 2016

Social Security Cost Of Living Adjustment (COLA)
JEHM Wealth & Retirement knew the news was going to be disappointing. In October it became official: Social Security recipients will be getting a raise of only 0.3% next year. On a $1,200 benefit that’s an extra $3.60 a month. On a $3,000 benefit it’s $9.

But beneficiaries may not even see that amount. If the Medicare Part B premium rises by more than the dollar amount of an individual’s Social Security COLA, the beneficiary will be spared the full premium increase, but their entire COLA will be swallowed up by Medicare premiums leaving their Social Security checks unchanged. That’s if they’re one of the 70% of beneficiaries who are held harmless as a result of having their Medicare premiums deducted from their Social Security checks in 2016.

Who is not held harmless?

Individuals who will not be held harmless in 2017 are people who: (1) enroll in Medicare for the first time in 2017; (2) did not have Medicare premiums deducted from their Social Security check in 2016 (i.e., they are delaying benefits); and (3) have modified adjusted gross income over $85,000 if single or $170,000 if married and therefore are subject to the income-related monthly adjustment amount.

Cost Of Living Adjustment Projections

Each year, in their annual report, Social Security trustees project the system’s financial operations over the next 75 years under low-cost, intermediate-cost, and high-cost scenarios. Their inflation projections have gradually been coming down. A few years ago they lowered it to 2.7%; this year’s report shows 2.6% as their long-term COLA projection. Interestingly, this COLA Estimate shows a projection of 2.9% for next year’s COLA, followed by 2.6% per year thereafter.

These COLA projections may seem high in light of today’s low inflation and recent low COLAs, but remember, they are projecting economic cycles over the next 75 years. Based on this COLA Table, the average COLA since 1975 (43 years) was 3.7%. This included the double-digit inflation years of 1980 and 1981 as well as the three 0% years we’ve seen recently. If we go back just 10 years, the COLA averages 1.7%.

There is a lot to know about Social Security from year-to-year, that is why JEHM Wealth & Retirement is here. To help guide you to and through retirement.

Eric and Jennifer Lahaie
JEHM Wealth & Retirement


Sources:  HoursesMouth
Copyright © 2016 JEHM Wealth and Retirement Strategies

Investment Advisory Services offered through Retirement Wealth Advisors, (RWA) a Registered Investment Advisor.  JEHM Wealth & Retirement Strategies and RWA are not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.

This information is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that JEHM Wealth & Retirement Strategies and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.

Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Fixed Insurance and Annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by Retirement Wealth Advisors.

Back To Top