WASHINGTON — Oct 13, 2017, 9:29 AM ET

Social Security benefits to rise by 2 percent in 2018

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Millions of Social Security recipients and other retirees will get a 2 percent increase in benefits next year. It's the largest increase since 2012 but comes to only $25 a month for the average beneficiary.

The Social Security Administration announced the cost--of-living increase Friday.

The COLA affects benefits for more than 70 million U.S. residents, including Social Security recipients, disabled veterans and federal retirees. That's about one in five Americans.

By law, the COLA is based on a broad measure of consumer prices generated by the Bureau of Labor Statistics. Advocates for seniors claim the inflation index doesn't accurately capture rising prices faced by seniors, especially for health care.

"It's squeezing them. It's causing them to dip into savings more quickly," said Mary Johnson of The Senior Citizens League. "The lifetime income that they were counting on just isn't there."

Some conservatives argue that the inflation index is too generous because when prices go up, people change their buying habits and buy cheaper alternatives.

Consumer prices went up only slightly in the past year despite a recent spike in gasoline prices after a series of hurricanes slowed oil production in the Gulf Coast, said Max Gulker, senior research fellow at the American Institute for Economic Research.

"For the most part, there was a decline in energy prices for a lot of the year," Gulker said. "But at the end of the year we saw that uptick in gas from the hurricanes."

The average monthly Social Security payment is $1,258, or about $15,000 a year.

Congress enacted automatic annual increases for Social Security in 1975. Presidents often get blamed when increases are small or zero. But President Donald Trump has no power to boost the increase, unless he persuades Congress to change the law.

In 2009, President Barack Obama persuaded Congress to approve one-time payments of $250 to Social Security recipients as part an economic stimulus package.

Over the past eight years, the annual COLA has averaged just above 1 percent. In the previous decade, it averaged 3 percent.

Johnson noted that multiple years of small or no COLA's reduces the income of retirees for the rest of their lives.

"Think about the length of a retirement period. Eight years is about a third of a (healthy) retirement," Johnson said.

The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a broad measure of consumer prices. It measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education.

The August report says energy prices are up 6.5 percent from the previous year, while the cost of medical care is up just 1.7 percent. The cost of food is up 1.1 percent.

The COLA is calculated using the average CPI-W for July, August and September, and comparing it to the same three months from the previous year.

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Follow Stephen Ohlemacher on Twitter at http://twitter.com/stephenatap

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  • ReviewTheFacts

    And that 2% will more than be swallowed up by the exponential increase of health care costs, the rise in insurance rates, and the cost for goods, ESPECIALLY if we enter a world war, which is growing more likely.

  • Lawrence Wilson

    How much will I lose this time as my Medicare Vantage premiums & co-pay's for exams & treatment, lab fees, & pharmaceuticals continue to go up??

  • Shoe Iron

    So what? Medicare will just take it, just like last time. No real increase. Fake news.

  • Robert Maxwell

    It's all a little amusing. If you're my age you spent years in the military and it wasn't covered by Social Security so you get nothing out of it, just as self-employed lacked coverage. Then, if you spent much of your professional career on government-0funded research grants on human aging -- don't worry, none more than $18,000, and that was only for two years -- you submitted a penny pinching proposal that had you down at half salary although everyone in Washington knew you'd be working full time and more, only the first $3,000 was subject to SS withholding.

    The result was a monthly income of roughly $1050. I'm not complaining because I enjoyed the work I was able to do. But think of it this way. Trump and the GOP are absolutely determined to kill the estate tax -- or "death tax", as their pollster likes to call it. If it's repealed, it means that half of Trump's cabinet members would pass on to their kids a billion and a half dollars.

  • Will Postthetruth

    For the second year in a row, this is a bizarre miscalculation. The Sept. '16 CPI-W was: 235.495. The Sept. '17 CPI-W was 240.939.
    100% x (240.939 - 235.495)/235.495 = 2.3%

    If the calculation gives us 2.3%, why are we only getting 2.0?
    For last year the calculation was:
    100% x (245.495 - 234.170)/234.170 = 0.6%
    But we only got 0.3%
    WHY?

  • Will Postthetruth

    "Some conservatives argue that the inflation index is too generous
    because when prices go up, people change their buying habits and buy
    cheaper alternatives."
    Yeah, we can buy dog food instead of chicken, right?

  • Holly

    Posters whining about a 2% raise. Unbelievable.

  • Kokomo Joe

    While the 'official' rate of inflation is around 2%, the more accurate rate based on 1990 standards is about 6%. Thus retirees will lose 4% with this deal, just this year. Then take the supremely rigged low interest rates for savings, much less than one percent and you see how retirees are being driven into poverty one nickel and one dime at a time. But, that's not all, every few years there's another rigged stock crash and the retirees rigged 401k fake retirement accounts are devastated.

    But, what do the politicians want to talk about? Right...LGBT rights, football players, lowering taxes for the super rich, taking or granting more gun rights....all stuff that has little to no bearing on the everyday lives of most people.

    And it's both parties.

  • mike basich

    Thats more than the Obama Administration gave in the last three years.

  • Fred

    those born disabled are still screwed, 730/month, need a cosigner to get a rental. if your family dies ,you are homeless forever. and congress has written blue laws/ religious laws to block treatment studies/testing. I have spinabifida and they have made some breakthroughs in stem cell stuff but us doesnt allow it,...

  • John Michael Davis

    Trump should put a stop to this and make those people get jobs. /s

  • Billy Bob Smith

    "The average monthly Social Security payment is $1,258, or about $15,000 a year."

    Based on a work year of 2,080 hours (40 hours/week times 52 weeks), that comes out to $7.21/hr, a few pennies below the Federal minimum wage.

  • Dale Blackstock

    I know that in some states, not all, are subject to a Windfall Elimination Provision (WEP). Those who are teachers, or some others on an annuity are penalized and we don't receive our full social security. I don't understand what it does or why Congress take OUR money from us. I asked my senators, John Cornhole and Ted Screws, why I am treated differently. I got some BS about SS going broke and that something had been done, etc. If Congress would pay back that $10B that they stole from SS to pay for Reagan's Star Wars Program, the TRUST fund called Social Security might more secure. Social Security has absolutely NOTHING to do with the budget. It is a trust fund.

  • RedSoxPatriotsCelticsBruinsFan

    Social security gets a raise but not interest rates. the Fed is still manipulating the economy. Paul volker is still alive you know. I wonder what he would say.

  • Butch Roberson

    I'm beginning to understand why Trump calls it fake news. Two percent of nothing is nothing.

    [email protected]

  • notagain

    Big whoop. Gobbled right up by increase in medicare supplement and prescription costs.

  • Banned by ABC,CNN,NBC and CBS

    It's causing them to dip into savings more quickly," Really...many seniors have no savings and $25.00 extra per month may sound like a little, but it can mean a lot because many of them survive on $1000.00 per month or less and if was not for subsidized elderly apartments many would be outright homeless. I deliver a dozen "meals on wheels" 2 days per week and know that an extra $25.00 would mean a lot to many elderly and the ones I deliver to. most live solely on social security their rent is about 400 per month utilities 200, so most of them live on about $100 per week for food. and maybe get another $120.00 for food stamps. Hopefully this raise is not eaten up by an increase in rent for them.

  • GayEGO

    I'll take it, before Trump and his GOP grab it!

  • OMAR MATUTE

    Wow,the social security pensioners will be filthy rich,with 20 dollars raise. They will go crazy spending left and right.