Social Security Adjustment Analysis

The Social Security Administration announced earlier today that the millions of Americans receiving Social Security would not receive a cost of living adjustment for 2016. This is just the third time in the last 40 years that recipients did not receive a cost of living adjustment. The last two were in 2010 and 2011.

These increases link to the consumer price index (CPI). The CPI used is for urban wage earners and clerical workers (CPI_W). This takes into consideration the spending habits of working Americans. Falling gas prices and transportation costs account for the biggest reason for the CPI-W not increasing (I will leave the discussion of whether this is the right CPI measurement for another day)

According to the Senior Citizens League study, Social Security benefits grew by 43 percent from 2000-2015, while Medicare, Part B premiums grew by 131 percent. This same study says that senior citizens' buying power has dropped by 22 percent!
Usually, when a CPI increase is added to your Social Security check, it offsets the increase in Medicare, Part B premiums. In years when it doesn't, most people (estimated at 70 percent) taking Social Security fall under the "hold harmless" provision which would prevent Medicare from increasing their premiums any more than the CPI-W. The remaining 30 percent face Part B premium increases of 50% or more, depending on your household income. The discussion of who is subject to these increases is beyond the scope of this