What's Your Social Security Benefit Missing? About $113 A Month

What’s Your Social Security Benefit Missing? About $113 A Month

Beneficiaries received a 1.7% cost-of-living adjustment (COLA) this month, making 2015 the sixth year of exceptionally low COLA growth. With the average monthly Social Security payment hovering around $1,090, the annual boost only increases benefits by about $20.20. "That's not enough to prevent a loss of benefit buying power," says The Senior Citizens League's Executive Director, Shannon Benton.

Over the past five years the annual adjustment averaged just 1.4 percent — less than half the 3 percent average of the prior two decades starting in 1990. The financial impact over six years of low COLAs isn't immediately apparent to most people, but it takes a huge toll on overall Social Security income over time. A new analysis for TSCL, that compared the increases from 2010 through 2015 against the 3% average, found that the benefits of the typical Social Security recipient would be about $5,298 lower by the end of 2015. In 2015, the average monthly Social Security benefit is about $113 lower, and will total about $1,356 less through the end of the year.

The financial impact doesn't stop there. COLAs affect people who haven't even claimed benefits yet, because they are part of the benefit formula. Beneficiaries lose the compounding effect they get with higher COLA increases, and that means millions of boomers will start with lower initial retirement benefits compared with retirees having similar earnings histories, but who retired in years when COLAs were the 3% average. Even when inflation returns to more typical levels, all beneficiaries' lifetime Social Security income will continue to be lower when compounded over a retirement.

TSCL believes the current COLA calculation isn't suitable for today's retirees and disabled, because it isn't adequately protecting the buying power of the benefits as intended by law. TSCL is lobbying for legislation that would provide a minimum COLA of 3% in years like this one when inflation drops below that percentage. What do you think? Tell us how low COLAs are impacting you.

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