Are You Happy With Your COLA?
Social Security recently announced that the Cost of Living Adjustment (COLA) for 2015 would equal 1.7 percent of current scheduled benefits. In other words, your Social Security check should increase by 1.7 percent, beginning with January's payment.
For the average retiree, a 1.7 percent increase amounts to about 22 dollars for single people, and 36 dollars for couples drawing benefits. Naturally, your increase may be slightly more or less than those amounts, depending upon the exact amount of your current monthly benefit checks.
Some retirees will be happy to have a little extra cash in their monthly budgets, but many others may feel disappointed in this year's COLA. After all, this will be the third year in a row that the increase has amounted to less than 2 percent. That's because inflation, as reported by the Consumer Price Index (CPI), has remained at historically low levels in recent years.
COLA is tied to the CPI, which measures the prices of common goods and services. But many seniors feel that the CPI doesn't accurately represent their unique spending habits. Since CPI measures spending by urban workers, who tend to be younger than the average retiree, the index may not give accurate weight to the price of things that affect the retirement population. Despite the inflation rate remaining low overall, prices of certain necessities like food and prescription medications have increased.
Do you feel this year's COLA is an accurate representation of your budgetary needs? If you're disappointed, remember that Social Security should comprise only part of your retirement income. Talk to your financial advisor about other ways to find more room in your budget, so that you can continue to enjoy your current retirement lifestyle.
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