Seniors will receive a 3.6 percent Social Security cost-of-living increase next year, the first since 2009, signaling that consumer prices are rebounding even as the economy remains sluggish and unemployment is high.
The increase was welcomed by seniors’ advocates who complained that beneficiaries were slighted in the past two years. But they said the increase was small and some of it will be wiped out by rising health care costs under Medicare.
“This [cost-of-living adjustment] will help to ease the financial hardship many older Americans face today,” said Nancy LeaMond, an AARP spokeswoman. “Unfortunately, the increase announced today will not completely ease their burden. Medicare premiums are also expected to rise for many.”
The average annual payment will rise $516, to $14,748, even as lawmakers on Capitol Hill consider changes to the formula to try to squeeze savings out of the program. Some lawmakers say using a different definition of inflation could save trillions of dollars in future decades and could help set the program on firmer financial footing.
Also adjusted for inflation, the maximum income that can be taxed for Social Security benefits will increase to $110,100 from $106,800. Of the 161 million working Americans who will pay Social Security taxes next year, 10 million will pay more because of the increase, the administration estimated.