The annual Social Security cost of living adjustment for 2019 could top 3%, according to a just-released estimate by The Senior Citizens League, boosting the average Social Security benefit of $1,300 by about $39 per month.
While the boost is welcome news, retirees continue to experience spikes in common household expenditures that are growing several times faster than 3%, the League reports.
The 2019 increase represents the highest COLA since 2012, when it was 3.6%. The COLA for 2018 is 2%, after no COLA in 2016, and just a 0.3% COLA in 2017.
The 2019 estimate is based on consumer price index data through April 2018.
“Our estimate could change, because we still have several months of CPI data to go before the COLA is announced in October,” Mary Johnson, The Senior Citizens League’s Social Security policy analyst, said in a statement.
Those living off of Social Security will not likely be “dancing in the streets” with the anticipated 3% COLA, Johnson said, despite the fact that over the past nine years the COLAs have averaged just 1.2%.
Why? Retirees, she said, “are experiencing cost increases in common household expenditures that are growing several times faster than 3%,” a trend that has been consistent over the past 8 years, and will continue into 2019.
The League reports that from January 2017 to January 2018, the costs of home heating oil has jumped 22% for people over 65, while the cost of Medigap premiums have spiked 16%.
The League’s annual survey of more than 1,130 retirees, conducted between January and March of 2018, found that household spending rose by more than $79 per month in 2017 for 55% of survey participants.
The House Ways and Means Social Security Subcommittee plans to hold a hearing Thursday to examine Social Security’s solvency, and will focus on findings of the 2018 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, which is due out this week.
The committee noted in announcing the hearing the 2017 Trustees Report, which found that Social Security’s combined trust funds will be exhausted in 2034, at which point beneficiaries would face a 23% across-the-board benefit cut unless Congress acts.
The trustees estimated that, if no action is taken, the Disability Insurance (DI) Trust Fund would be unable to pay full benefits in 2028.
The trustees also noted that the gap between Social Security’s costs and revenues over the next 75 years is equal to $12.5 trillion, up from $11.4 trillion in 2016.
— Related on ThinkAdvisor:
- Social Security Numbers Have Morphed Into Identity Theft Vehicles
- Social Security Timing: What Couples Should Consider — The Advisor and the Quant