The Social Security Administration (SSA) just announced the biggest boost to benefits for Social Security and Supplemental Security Income recipients since 2012.
The October 11 announcement of the 2.8% hike in monthly benefits comes on the heels of strengthening economic fundamentals and healthy inflation.
Hikes generally come in relation to inflation; in years when there is no inflation, there is no increase in benefits. However, benefits are never reduced if there’s no inflation.
This is the largest COLA hike in seven years. Recipients have the ongoing rise of the nation’s inflation rate to thank for the big COLA bump in 2019.
That’s because COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a broad measure of the price of food, energy, health care, housing, transportation and more.
The average monthly Social Security check in June 2018 was $1,413, according to the SSA. The 2.8% increase next year will be roughly an extra $39 on an average check each month.
While that’s not exactly a lot of money, it’s at least something for the 44% of single elderly people who depend on that monthly check for 90% or more of their income.
Meanwhile, a cost of living adjustment is just one of three ways your Social Security check can grow in retirement.
The other two have to do with understanding the limits on what you earn if you choose to work in retirement, and the related topic of understanding how SSA re-pays you (at your full retirement age) if you go over those ever-changing limits.