Statistics indicate that most people who are receiving Social Security are relying on their benefits for the majority of their income. This is not a very good situation to be in because of the fact that Social Security payouts are quite limited. The average monthly benefit is a bit over $1200 this year, and the maximum is just $2513 in 2012.
People who are living on a fixed income face a lot of challenges from the start. But you also have to contend with the ever-increasing cost of living while your income more or less stays the same.
There are cost-of-living adjustments to Social Security, but they are not guaranteed and when they do arrive they are not necessarily going to do a whole lot for you. There was no cost-of-living adjustment in 2010 or 2011, but there was a 3.6% COLA this year. The COLA is going to be 1.7% in 2013.
This 1.7% is obviously going to make a very minute difference in the quality of your life as a Social Security recipient. However, the real impact of this increase is reduced even further by the fact that out-of-pocket Medicare expenses are going up in 2013.
Medicare Part B comes with a monthly premium that must be paid, and most people have this deducted from their Social Security payouts. Earlier reports estimated the increase in 2013 to be about nine dollars per month, but in fact it is going to be five dollars each month.
The Medicaid Part B deductible is going up to $147 (from the $140 that was previously in place) and the Medicare Part A deductible is rising from $1156 to$1184.
If you are comfortable during your retirement years these slight increases won’t matter a bit and the cost-of-living adjustments will be welcome but far from necessary. On the other hand, if you are barely getting by every penny will count.
To be among the former group rather than the latter take action right now to discuss your future with a licensed and experienced central New Jersey retirement planning lawyer.