According to the Social Security Administration, the average retired worker will see a 1.7% increase in benefits in 2015, which equates to about $22 per month. This benefits increase will go into effect January 1, affecting approximately 58 million people. Because of this raise, the average monthly Social Security check next year will be $1,328 or $15,936 annually.
This 1.7% cost of living expense increase is up from last year’s reported 1.5%. However, it still falls significantly lower than the 3.6% jump seen in 2012. For two years prior, retired workers saw no increases to their benefits because of falling prices during the recession.
The modest 2015 increase is linked to today’s release of the Consumer Price Index, the government’s primary inflation measure that showed prices were up 1.7% for the past 12 months with year-ending in September.
Although getting a benefits increase is better than no raise at all, seniors still face challenges specific to higher grocery and utility bills, not to mention daily essentials. Retirees also find it hard to purchase a home because housing costs are rising faster than inflation. On a positive note, seniors do not have an expense for driving to and from work but this also means they will probably not benefit from the recent 3% drop in gas prices.
A lot of retired workers depend on Social Security as their main source of income and as such, many struggle to get by as it is. According to the United States Census Bureau, close to 10% of people over the age of 65 live at poverty level or below, with women and minorities affected most.
Some people are trying to stay positive about the new benefit increase, saying that any additional money is better than no money at all. The problem is that many retirees are in poor health so a 1.7% increase does little to ease their burden. For those who have major health issues, the only way to stay afloat is by taking out a second mortgage since the monthly benefits check does not stretch far enough.
Also announced by the Social Security Administration is that the maximum amount of earnings workers will have to pay taxes on will go up from $117,000 to $118,500, which will also become effective January 1, 2015. This decision was based on the increase in average wages.