With inflation ticking upward in 2017, retirees are likely to see the largest cost-of-living adjustment in their Social Security benefits since 2011.
Since its enactment in 1935, Social Security has become an important feature of the retirement landscape for all Americans. But its finances are in need of repair. Despite the significant taxes already paid into the Social Security system, future benefit payments are expected to both outrun future tax revenues and consume any accumulated surplus (Chart 1).
We are all reasonably familiar with the idea of Social Security: You pay money in while you’re working and you get something back when you’re retired. But the system is complex, and even the most basic rules are misunderstood by a large segment of the population.
The annual cost-of-living adjustment (COLA) will be announced on Oct. 15, when the last data required to compute it becomes available. But the data already suggest that prices have fallen over the past 12 months, removing the need for an adjustment. If prices have fallen but the COLA is zero, the purchasing power of Social Security benefits would increase.
Deciding when to apply for Social Security benefits is one of the most important (and most daunting) decisions a person will make in their life. With the release of the Social Security Administration’s Trustee’s report last week, it’s only appropriate to examine seven commonly held myths about this complex government program: