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Social Security is Giving You a Raise in 2018!

Posted by David Ghiorso, CPA, December 20, 2017

For most retirees, Social Security comprises an important part of your income. Your benefits are relatively fixed, depending upon your earnings history, as well as the age at which you first filed your claim. It’s great to have supplemental income upon which you can depend, but inflation can impact your purchasing power over the years.

However, the Social Security Administration does routinely issue Cost of Living Adjustments (COLAs), based upon the inflation rate. During recent years, these adjustments have been historically small or even non-existent, so you might be pleased to learn that your checks will be increasing by 2 percent next year.

Two percent still isn’t a lot, amounting to about 27 dollars for the average retiree. Your own increase might be larger or smaller than that, depending upon your individual benefit amount.

Some of you might not notice this increase in your benefits, however. If you pay Medicare Part B premiums straight from your Social Security checks, a provision called the “hold harmless” rule has prevented your Medicare Part B premiums from rising faster than your Social Security COLAs. Essentially, you cannot be charged higher Medicare premiums if those higher charges would result in a smaller Social Security check. The standard premium is now 134 dollars per month, but you might have been “held harmless” against increases during recent years in which you did not receive a COLA.

But since your Social Security checks will now rise, beginning in January, the higher Medicare premiums can now kick in. So, you might not notice much of a difference in your checks, depending upon how much you receive.

This is a highly individual situation, so watch your mail for notices from Social Security and Medicare. They will explain your benefit and premium amounts to you, so that you know what to expect in January.

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