An Update on Future Social Security Benefits

There are many important elements to remember as you’re planning for retirement, such as life insurance options, income from annuities, pension income, and the rising cost of medical care. Social Security is just one part of your overall retirement income picture, but it’s a very important part.

Many retirees count on Social Security as a significant source of retirement income. And since retirement income needs to keep pace with inflation, many may feel disappointed at the news that this year’s Cost of Living Adjustment (COLA) will amount to 1.7 percent of current scheduled benefits. The average benefits check for a single Social Security recipient should increase by about 22 dollars.

COLA is tied to the Consumer Price Index, which measures inflation. According to the CPI, the average prices of goods and services remained nearly level over the past year, meaning inflation grew only a very small amount. Yet, with many Americans reporting large hikes in the cost of necessities like food and medical care, it is possible that the CPI doesn’t accurately measure the goods and services which are used in disproportionate amounts by senior citizens. In other words, while overall inflation remains low, retirees still observed a significant increase in their own cost of living.

Since it’s important to inflation-proof your retirement income, this year’s comparably low COLA should serve as a warning. Don’t depend too heavily on Social Security, and remember to plan for other sources of income in retirement. Your future COLAs may not always adequately reflect increases in your own cost of living.

Remember to meet regularly with your insurance or financial advisor, to reevaluate your retirement income capabilities and goals. Together you can discuss inflation, and find ways to make sure your retirement income will adequately provide for you in your later years.

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http://www.ssa.gov/news/cola/
This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 

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