Just in time for Halloween here’s a story that will leave too many retirees tossing and turning with nightmares. The average Social Security benefit will increase a paltry $3.92 per month in 2017. That’s just 0.3%.
Social Security cost of living adjustment (COLA) increases are based on the inflation rate, which has been low in recent years due largely to depressed oil and gas prices. As a result, there was no COLA increase for beneficiaries in 2016.
Advocates for retirees argue that this method of calculating increases is unfair because retirees typically drive less than younger people and thus reap no benefit from lower energy costs. At the same time, older Americans typically have higher medical and drug costs, which continue to soar.
This news impacts a huge segment of the US population. About 66 million Americans receive Social Security. For 61% of retirees that monthly check provides half of their income. It’s the main source of money for about a third of retired workers. The average monthly benefit is currently $1,341. That means a married couple with no other source of money who both receive that average payment from Social Security are living on about $31,000.
Of course, there is a way out of this waking nightmare. You just have to develop other streams of post-career income. If you haven’t started saving for retirement, start today. As you near retirement, focus on assets that generate income – dividends from stocks, interest from bonds, and pay outs from real estate investment trusts, preferred stocks and other investment vehicles. Consider taking a part-time job in retirement and/or acquiring property to generate rental income.
I’m a firm believer that Social Security is going to be around for a long time. But the program was never intended to provide for all of your retirement needs.
The payments are unlikely to ever increase significantly. In fact, benefits might one day be reduced to save the system.
Less dependence Uncle Sam means better sleep now, and a richer more secure retirement later.
Check out our Social Security Optimizer to better understand how Social Security works and how it will affect your retirement.