Retirees will receive a paltry increase in their Social Security checks in 2017 -- the second consecutive year of flat or near-flat benefits, and the fifth year of inflation adjustments below 2 percent.
Next year's cost-of-living adjustment (COLA) will be just two-tenths of 1 percent, according to predictions in the annual report of the trustees for Social Security and Medicare, released on Wednesday.
That number could be revised upward this autumn, when the official COLA is released, said Paul Van de Water, senior fellow at the Center on Budget and Policy Priorities -- perhaps as high as one-half of 1 percent.
"The trustees' assumptions are based on inflation numbers that are a few months old," he said. "The latest numbers suggest the COLA could be a bit higher." Still, for a retiree receiving the average monthly Social Security benefit -- $1,341 -- the raise is not likely to top a paltry $5 per month.
Don't spend it all in one place, folks.
Tweaking The Formula
The COLA news underscores the need to revisit Social Security's formula for keeping seniors even with costs, and it will provide fresh fuel for proponents of a broader expansion of benefits as part of any eventual program reform.
Progressives have been calling for a more generous annual COLA formula. The current formula is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which gauges a market basket of goods and services of working people -who tend to be younger and spend less on healthcare than seniors.
A more generous COLA would be tied to the CPI-E, an experimental measure created by the U.S. Bureau of Labor Statistics focused on inflation affecting seniors.
Healthcare cost increases have been moderate over the past few years, but they are starting to rise. The trustees project that per-beneficiary costs in Medicare's Part B (outpatient services) will rise 3.1 percent next year.