The annual Social Security cost-of-living adjustment (COLA) increased benefits by 2% this year. But Social Security recipients probably did not see much, if any, increase in net Social Security benefits, because of the deduction for the Medicare Part B premium.
A new report from the Center for Retirement Research at Boston College has confirmed that the adequacy of Social Security benefits is substantially reduced by Medicare’s high out-of-pocket costs. Researchers studied the share of Social Security benefits that individuals, age 65 and older, spent on their healthcare costs, and made some sobering findings:
- Average out-of-pocket spending, not including long-term care, was $4,274 for the year in 2014, with approximately two-thirds ($2,965) spent on premiums.
- In 2014, the average retiree had only 65.7% of his or her Social Security benefit remaining after out-of-pocket spending.
- Nearly one-fifth (18%) of retirees had less than 50% of their 2014 Social Security benefit remaining after out-of-pocket spending.
The findings confirm similar trends from The Senior Citizens League’s 2017 Senior Survey results. A majority of survey participants, 56%, said they had about 66% of their Social Security benefit remaining after out-of-pocket spending for Medicare costs. Ten percent said they had less than 50% of their Social Security benefit remaining after out-of-pocket costs.
How is your Social Security benefit faring? Take TSCL’s 2018 Senior Survey.
Sources: “How Much Does Out-Of-Pocket Medical Spending Eat Away At Retirement Income?” Center for Retirement Research at Boston College, October 2017.