Drumroll please. The Social Security Administration today announced that 61 million beneficiaries will receive a 2% cost of living adjustment (COLA) starting with benefits paid in January 2018. That's music to the ears of seniors who got a skimpy 0.3% hike at the beginning of this year, after being stiffed with no COLA at all in 2016. Next year's 2% hike, which is based on inflation as measured by the consumer price index, is the largest since a 3.6% increase in 2011.
Social Security says the average benefit will rise by $27 a month.
But don't start feeling like the drum major at the head of a parade just yet. Come January, you'll more likely feel like the guy sweeping up at the end.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
There's a good chance that most, if not all, of the increase will be spirited away to cover higher Medicare premiums before it ever makes its way into the automatic deposit into your bank account. Part of the blame goes to a rule that's actually designed to help beneficiaries, and successfully has been doing just that for the past few years.
The "hold harmless" provision prevents Medicare Part B premiums, which in most cases are deducted from Social Security benefits, from rising by more dollars than benefits do. So, when COLAs are small or nonexistent, premiums can't rise as fast as they should to keep pace with rising medical costs. The provision covers most beneficiaries, except first-time enrollees, those who don't have premiums deducted from benefits (because they haven't begun receiving benefits) and those subject to high-income premium surcharges.
-
Why Walmart Stock's a Buy After Its Beat-And-Raise QuarterWalmart is the best Dow Jones stock Tuesday after the retail giant's solid earnings report and outlook and Wall Street thinks it's just getting started. Here's what they're saying.
-
Premium Tax Credit: Are You Eligible For This Health Insurance Tax Break?Tax Credits The tax credit can help qualifying individuals pay for coverage from the Affordable Care Act’s health insurance marketplace.
-
457 Plan Contribution Limits for 2025Retirement plans There are higher 457 plan contribution limits for state and local government workers in 2025 than in 2024.
-
Medicare Basics: 11 Things You Need to KnowMedicare There's Medicare Part A, Part B, Part D, Medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare — and much more.
-
Six of the Worst Assets to Inheritinheritance Leaving these assets to your loved ones may be more trouble than it’s worth. Here's how to avoid adding to their grief after you're gone.
-
SEP IRA Contribution Limits for 2024 and 2025SEP IRA A good option for small business owners, SEP IRAs allow individual annual contributions of as much as $69,000 in 2024 and $70,000 in 2025..
-
Roth IRA Contribution Limits for 2024 and 2025Roth IRAs Roth IRA contribution limits have gone up. Here's what you need to know.
-
SIMPLE IRA Contribution Limits for 2024 and 2025simple IRA The SIMPLE IRA contribution limit increased by $500 for 2025. Workers at small businesses can contribute up to $16,500 or $20,000 if 50 or over and $21,750 if 60-63.
-
457 Contribution Limits for 2024
retirement plans State and local government workers can contribute more to their 457 plans in 2024 than in 2023.
-
Roth 401(k) Contribution Limits for 2025retirement plans The Roth 401(k) contribution limit for 2024 is increasing, and workers who are 50 and older can save even more.
