Social Security recipients will next year receive the largest increase in monthly benefit payments since 2012.
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The Social Security Administration announced Friday a 2.0% increase for monthly checks starting in late December for disability beneficiaries and in January for the larger program covering older Americans. It is the largest cost-of-living adjustment since a 3.6% increase in 2012.
About 66.7 million people--roughly 1 in 5 Americans--will receive a boost to their income next year due to the adjustment. Social Security benefits adjust each year, with the goal of keeping payments in line with changes in consumer prices. The increase is slightly smaller than the 2.2% increase Social Security trustees had projected this summer.
The agency also announced the maximum amount of earnings subject to the Social Security will increase next year to $128,700 from $127,200, a 1.2% increase.
The adjustment "gives some relief to Social Security beneficiaries," said AARP CEO Jo Ann Jenkins, head of the powerful lobbying group for older Americans. But for many, "this cost of living increase may not adequately cover expenses that rise faster than inflation including prescription drug, utility and housing costs."
In 2017, recipients received a 0.3% increase after receiving no cost-of-living adjustment in 2016. That reflected very low inflation in 2015 and 2016 due to plummeting gasoline prices.
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There has been no annual increase three times since the recession ended in 2009. That had never previously occurred since Congress approved automatic annual adjustments in the mid-1970s. Annual increases averaged 4.3% in the 1980s and 1990s.
But a larger increase next year could be at least partially offset by increased Medicare premiums. The cost-of-living figure plays a major part in determining premiums for Medicare Part B, which covers doctor visits and other types of outpatient care for elderly and disabled Americans.
While the final figure on the premium increase won't be announced immediately--the Centers for Medicare and Medicaid Services last year released it in November--the bump is likely to result in higher premiums for a majority of Medicare beneficiaries.
The cost-of-living adjustment matches up with the recent trend in consumer prices. An uptick in energy prices and other costs in the economy propelled consumer prices modestly higher since mid-2016. Hurricanes striking the southern U.S. in recent months pushed gasoline prices more.
But inflation is still low by historical standards.
The Social Security Administration determines annual cost-of-living adjustments from a Labor Department inflation gauge, the consumer-price index for urban wage earners and clerical workers, or CPI-W. That is a slightly different measure than the more broadly reported index that covers all urban consumers.
The calculation is based on the average monthly price-index level from the July-through-September period.
Write to Eric Morath at email@example.com
(END) Dow Jones Newswires
October 13, 2017 10:22 ET (14:22 GMT)