Social Security Administration announced Friday plans to add 2% in its benefits payments. Social Security checks will increase starting in January 2018 and Supplemental Security Income checks go up at the end of December 2017. This 2% figure is based on the rise in the cost of living and is the administration's largest increase since 2012. Although there was no increase in 2016, beneficiaries received a small 0.3% hike in 2017.
The cost-of-living adjustment will be doled out to the 61 million Social Security beneficiaries and 8 million people on SSI. The average boost will be about $25 to $27 more per month. While some people receive both types of benefits, the hike still trails the cost of inflation.
Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor's Bureau of Labor Statistics, the SSA website says. By looking at the change in the Consumer Price Index we can track, year over year, the average cost of an item. For example, an item that cost 9 cents in 1913 costs about $2.40 in 2017.
The Consumer Price Index rose 0.5% in September, reports the U.S. Bureau of Labor Statistics. Over the past 12 months, the cost of all items, a.k.a. inflation, rose 2.2%.
"Of the estimated 175 million workers who will pay Social Security taxes in 2018, about 12 million will pay more because of the increase in the taxable maximum," the SSA states.