The largest inflation adjustment in 27 years will begin in January. It’s the largest increase since a 7.4 percent jump in 1982 and is more than double the 2.3 percent rise that retirees got in their monthly checks starting in January of this year. The typical retiree’s monthly check will go from $1,090 to $1,153. The average monthly check for a disabled worker will go from $1,006 to $1,064. Good news for 50 Million people who are strapped for cash and living on a fixed income.
Using the money to offset the increased costs of food, medication, and energy the increase may not feel significant. The inflation adjustment is based on the amount the Consumer Price Index increases from July through September from one year to the next. In addition to the cost of living adjustment, the government announced Thursday that the maximum amount of earnings subject to the Social Security tax will increase next year to $106,800, up from $102,000 this year.
For years the subject of Social Security has gone round and round the government table, with no clear answers as to how to fix the situation. 78 million baby boomers are facing retirement in the next few years. If no changes are made, the Social Security trust fund is projected to deplete its reserves in 2041 and will begin paying out more than it collects in benefits even sooner, starting in 2017. The pyramid diagram of Social Security (the many support the few) turns upside down as there will be a wider population needing Social Security then people paying into it.
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