Editors' pick: Originally published Nov. 22.
While the recent announcement of the 2017 cost of living adjustment for Social Security didn't lead to many cheers, experts say it can serve as a good wake up for Americans.
"Although the recent COLA announcement from the Social Security Administration didn't inspire much enthusiasm, it can be useful as a reminder that Americans are now responsible for the majority of our own retirement security, which includes both saving enough money for retirement and ensuring that our money lasts as long as we do," said Katie Libbe, vice president of consumer insights for retirement and insurance firm Allianz Life.
Social Security checks on average are expected to rise just about $5 per month in 2017, after the 0.3% COLA was announced. Libbe said just as most people can no longer rely on pensions to provide retirement income, people should also understand that Social Security won't be able to cover many of their retirement expenses, especially as inflation eats away at purchasing power.
"That's why it's so crucial that Americans start planning now for ways that they can build more guarantees into their long-term financial strategy," Libbe said.
Robert Johnson, president and CEO of The American College of Financial Services, said the minuscule COLA increase in Social Security reinforces how inadequate Social Security is to fund peoples' retirements. While Social Security is an important part of income for today's elderly — providing roughly 40% of income for retirees, it was never intended to be the primary source of income for retirees, but was part of the social safety net, Johnson said.