Social Security checks will grow in 2019 as inflation rises - WBOC-TV 16, Delmarvas News Leader, FOX 21 -

Social Security checks will grow in 2019 as inflation rises

Posted: Updated:
  • NationalMore>>

  • Canada now world's largest legal marijuana marketplace

    Canada now world's largest legal marijuana marketplace

    Tuesday, October 16 2018 10:38 PM EDT2018-10-17 02:38:03 GMT
    Wednesday, October 17 2018 2:28 AM EDT2018-10-17 06:28:39 GMT
    (Paul Daly/The Canadian Press via AP, File). FILE - In this Oct. 4, 2018, file photo, Thomas Clarke poses for a photo outside his cannabis store, THC Distribution, in Portugal Cove-St. Philip's, Newfoundland and Labrador. On Wednesday, Oct. 17, Canada ...(Paul Daly/The Canadian Press via AP, File). FILE - In this Oct. 4, 2018, file photo, Thomas Clarke poses for a photo outside his cannabis store, THC Distribution, in Portugal Cove-St. Philip's, Newfoundland and Labrador. On Wednesday, Oct. 17, Canada ...
    And they're off: Canada starts legal marijuana sales and becomes world's largest national pot marketplace.More
    And they're off: Canada starts legal marijuana sales and becomes world's largest national pot marketplace.More
  • Scope of Michael's fury becomes clearer in Florida Panhandle

    Scope of Michael's fury becomes clearer in Florida Panhandle

    Wednesday, October 17 2018 12:18 AM EDT2018-10-17 04:18:29 GMT
    Wednesday, October 17 2018 2:00 AM EDT2018-10-17 06:00:18 GMT
    (AP Photo/David Goldman). Residents line up for food from the Red Cross outside a damaged motel, Tuesday, Oct. 16, 2018, in Panama City, Fla., where many residents continue to live in the aftermath of Hurricane Michael. Some residents rode out the stor...(AP Photo/David Goldman). Residents line up for food from the Red Cross outside a damaged motel, Tuesday, Oct. 16, 2018, in Panama City, Fla., where many residents continue to live in the aftermath of Hurricane Michael. Some residents rode out the stor...
    The scope of the Hurricane Michael's fury has become clearer after nearly a week of missing-persons reports and desperate searches across the Florida Panhandle.More
    The scope of the Hurricane Michael's fury has become clearer after nearly a week of missing-persons reports and desperate searches across the Florida Panhandle.More
  • Trailing in polls, O'Rourke lays into Cruz in Texas debate

    Trailing in polls, O'Rourke lays into Cruz in Texas debate

    Tuesday, October 16 2018 5:26 PM EDT2018-10-16 21:26:34 GMT
    Wednesday, October 17 2018 2:00 AM EDT2018-10-17 06:00:05 GMT
    (AP Photo/Eric Gay). Democratic U.S. Senate candidate Beto O'Rourke, center, ducks through the rain as he arrives for rally, Monday, Oct. 15, 2018, in San Antonio. O'Rourke is taking a sharper tone in his campaign heading into the final scheduled debat...(AP Photo/Eric Gay). Democratic U.S. Senate candidate Beto O'Rourke, center, ducks through the rain as he arrives for rally, Monday, Oct. 15, 2018, in San Antonio. O'Rourke is taking a sharper tone in his campaign heading into the final scheduled debat...
    Democrat Beto O'Rourke is hoping to reverse polls showing him fading against Republican incumbent Ted Cruz in the second debate of a Texas Senate race that's become one of the nation's most-watched.More
    Democrat Beto O'Rourke is hoping to reverse polls showing him fading against Republican incumbent Ted Cruz in the second debate of a Texas Senate race that's become one of the nation's most-watched.More

By RICARDO ALONSO-ZALDIVAR
Associated Press

WASHINGTON (AP) - Tens of millions of Social Security recipients and other retirees will get a 2.8 percent boost in benefits next year as inflation edges higher. It's the biggest increase most retired baby boomers have gotten.

Following a stretch of low inflation, the cost-of-living adjustment, or COLA, for 2019 is the highest in seven years. It amounts to $39 a month for the average retired worker, according to estimates released Thursday by the Social Security Administration.

The COLA affects household budgets for about one in five Americans, including Social Security beneficiaries, disabled veterans and federal retirees. That's about 70 million people, enough to send ripples through the economy.

Unlike most private pensions, Social Security has featured inflation protection since 1975. Beneficiaries also gain from compounding since COLAs become part of their underlying benefit, the base for future cost-of-living increases.

Nonetheless many retirees and their advocates say the annual adjustment is too meager and doesn't reflect higher health care costs for older people. Federal budget hawks take the opposite view, arguing that increases should be smaller to reflect consumers' penny-pinching responses when costs go up.

With the COLA, the estimated average monthly Social Security payment for a retired worker will be $1,461 a month next year.

"For more recent retirees, the 2019 COLA will be the largest increase they have gotten to date," said policy analyst Mary Johnson, of the nonpartisan Senior Citizens League.

But retiree Danette Deakin, of Bolivar, Missouri, said she feels as though her cost-of-living adjustment is already earmarked for rising expenses.

Her Medigap insurance for costs not covered by Medicare is going up, and so is her prescription drug plan. She expects her Medicare Part B premium for outpatient care will also up.

"It isn't enough of an increase that it takes care of all of the increases from health care, plus rent - our rent gets increased every year," said Deakin, 70, who worked in the finance department at a boat dealership.

Health care costs eat up about one-third of her income, she estimated.

"I appreciate the COLA adjustment, and in no way am I complaining," Deakin added. "It's just that every single thing you can talk about goes up. It doesn't go down."

By law, the COLA is based on a broad index of consumer prices. Advocates for seniors claim the general index doesn't accurately capture the rising prices they face, especially for health care and housing. They want the government to switch to an index that reflects the spending patterns of older people.

"What the COLA should be based on is still a very real issue," said William Arnone, CEO of the National Academy of Social Insurance, a research organization not involved in lobbying. "Older people spend their money in categories that are going up at a higher rate than overall inflation."

The COLA is now based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education.

Advocates for the elderly would prefer the CPI-E, an experimental measure from the government that reflects costs for households headed by a person age 62 or older. It usually outpaces general inflation, though not always.

COLAs can be small or zero, as was the case in several recent years. People often blame the president when that happens. However, the White House can't dictate the COLA, which is calculated by nonpolitical experts.

President Donald Trump has repeatedly vowed not to cut Social Security or Medicare. But the government is running $1 trillion deficits, partly as a result of the Republican tax cut bill Trump signed. Mounting deficits will revive pressure to cut Social Security, advocates for the elderly fear.

"The revenue loss in the tax bill contributes to much higher deficits and debt, and that is where the threats begin to come in," said David Certner, policy director for AARP. "Social Security, and in particular the COLAs, have been the target."

Former President Barack Obama floated - but ultimately dropped - a proposal called chained CPI, which would have slowed annual COLAs to reflect penny-pinching by consumers. Behind it is the idea that when the price of a particular good or service rises, people often respond by buying less or switching to a lower-cost alternative.

Because of compounding, smaller COLAs would have a dramatic effect over time on the federal budget and Social Security finances. But if inflation continues to rise, proposals to scale back cost-of-living adjustments carry greater political risk.

Beyond federal budget woes, Social Security faces its own long-term financial problems and won't be able to pay full benefits starting in 2034.

Social Security is financed by a 12.4 percent tax on wages, with half paid by workers and the other half paid by employers. Next year, the maximum amount of earnings subject to the Social Security tax will increase from $128,400 to $132,900.

About 177 million workers pay Social Security taxes. Of those, nearly 12 million workers will pay more in taxes because of the increase in taxable wages, according to the Social Security Administration.

In addition to retirees, other Social Security beneficiaries include disabled workers and surviving spouses and children. Low-income disabled and elderly people receiving Supplemental Security Income also get a COLA.

Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • InternationalMore>>

  • Pakistan executes man convicted of killing 8 children

    Pakistan executes man convicted of killing 8 children

    Tuesday, October 16 2018 10:39 PM EDT2018-10-17 02:39:34 GMT
    Wednesday, October 17 2018 2:28 AM EDT2018-10-17 06:28:56 GMT
    A serial killer of 8 children has been executed at a Pakistani prison after the country's top court rejected request for his public hanging.More
    A serial killer of 8 children has been executed at a Pakistani prison after the country's top court rejected request for his public hanging.More
  • Migrant caravan marches on in Guatemala amid Trump's threats

    Migrant caravan marches on in Guatemala amid Trump's threats

    Wednesday, October 17 2018 12:09 AM EDT2018-10-17 04:09:36 GMT
    Wednesday, October 17 2018 2:28 AM EDT2018-10-17 06:28:54 GMT
    (AP Photo/Moises Castillo). Honduran migrants rest at an improvised shelter in Chiquimula, Guatemala, Tuesday, Oct. 16, 2018. U.S. President Donald Trump threatened on Tuesday to cut aid to Honduras if it doesn't stop the impromptu caravan of migrants,...(AP Photo/Moises Castillo). Honduran migrants rest at an improvised shelter in Chiquimula, Guatemala, Tuesday, Oct. 16, 2018. U.S. President Donald Trump threatened on Tuesday to cut aid to Honduras if it doesn't stop the impromptu caravan of migrants,...
    A caravan of some 2,000 migrants hoping to reach the United States marched deeper into Guatemala as President Donald Trump threatened to cut off aid to Central American countries that don't stop them.More
    A caravan of some 2,000 migrants hoping to reach the United States marched deeper into Guatemala as President Donald Trump threatened to cut off aid to Central American countries that don't stop them.More
  • Australia shifts on refusal to send refugees to New Zealand

    Australia shifts on refusal to send refugees to New Zealand

    Tuesday, October 16 2018 10:28 PM EDT2018-10-17 02:28:10 GMT
    Wednesday, October 17 2018 2:28 AM EDT2018-10-17 06:28:47 GMT
    Australia's prime minister has signaled that he could accept New Zealand's longstanding offer to resettle 150 refugees exiled to Pacific islands as long as they would be banned from ever entering Australia.More
    Australia's prime minister has signaled that he could accept New Zealand's longstanding offer to resettle 150 refugees exiled to Pacific islands as long as they would be banned from ever entering Australia.More
Powered by Frankly

All content © Copyright 2000 - 2018 WBOC. All Rights Reserved. For more information on this site, please read our Privacy Policy, and Terms of Service, and Ad Choices