Social Security beneficiaries set to get biggest bump in seven years – MarketWatch
Getty Images Retirees in 2019 will get the biggest increase in Social Security benefits in seven years. Retired Americans who collect Social Security can look forward in 2019 to the biggest increase in benefits in seven years.
Retirement benefits are slated to rise 2.8% next year, based on the formula that determines annual cost-of-living adjustments in Social Security. It’s the biggest gain since a 3.6% advance in 2012.
The government made it official on Thursday after the release of September’s consumer price index . Increases in Social Security benefits are tied to the CPI.
See Also Elevate Your Tailgate With a 500-Square-Foot RV × In 2018 the average beneficiary got about $1,405 a month. A 2.8% increase would amount to just over $39 a month or around $472 over a year.
Read: The reward for the lowest unemployment rate since 1969? Higher rates for your loans
The increase in 2019 is sure to be welcomed by the 60 million-plus Americans who receive Social Security benefits. Benefits rose 2% in 2018 and just 0.3% in 2017.
In theory benefits are merely supposed to keep up with inflation, but some retirees are more affected by inflation than others.
Retirees who are healthy, own their own homes and don’t drive much are likely fare best. But those who rent, drive frequently or need lots of medical care won’t do as well.
Read: What you probably don’t know about Social Security
How come? Much of the increase in inflation this year is tied to higher rents, gasoline prices and health care. For seniors who spend a lot of money on those things, the increase in Social benefits probably won’t cover all their expenses.
The annual cost of living increase is determined by taking the average rate of inflation from July through September and comparing it the same three-month period a year earlier, using an index known as CPI-W.
More from MarketWatch Why retirees should feel very worried right now 10 commandments of retirement Reality check: Here’s what the average retiree spends every month Jeffry Bartash Jeffry Bartash is a reporter for MarketWatch in Washington.