[ad_1]
WASHINGTON – Seniors and other Americans on social security will see the largest increase in benefits in seven years in January, a relief that for the first time in years will not be largely absorbed by rising health care costs.
The increase in the cost of living in 2019 will be 2.8%, announced Thursday the Social Security Administration, which translates into an average increase in pension benefits of the order $ 40 a month. More than 62 million Americans receive social security benefits, mostly retirees.
While social security recipients have a boost, other families will see their pay checks slightly reduced: the maximum amount of earnings subject to the social security tax will increase from $ 128,400 to $ 132,900, a increase of 3.5%. Employees who reach this new threshold will have to pay $ 279 in additional taxes and their employers will have to pay the same.
The adjustment to the cost of living, based on a formula reflecting changes in consumer prices, will be the largest monthly payments since an increase of 3.6% in 2012. This year, the increase was 2.0%.
A larger monthly payment will provide "the necessary income security for Social Security recipients and their families who depend on the modest benefits they have earned," said Jo Ann Jenkins, AARP Executive Director, in a statement.
The gains come after no change in benefit payments in 2016 and an increase of 0.3% in 2017. During these years, some recipients and their advocates said that it was difficult because seniors' costs were higher, especially for medical care.
Seniors can now take advantage of broader trends in inflation. The overall price increase over the past year has been concentrated in energy costs, including gasoline. Recipients who do not have daily commutes to work may feel less penalized by higher gas prices than other households.
At the same time, medical care price increases have slowed since 2016 and have been rising in recent months at a slower pace than overall inflation.
The costs of Medicare should also remain under control next year. This summer, Medicare administrators projected that the standard monthly premium for 2019 Medicare Part B, which covers doctor visits and other types of ambulatory care, would increase from $ 1.50 to $ 135.50. The final figure of the premium increase can not be announced immediately. The Centers for Medicare and Medicaid Services generally release it a few weeks after the Social Security Administration announced its cost-of-living adjustment.
"This year, people will keep much of the increase in their benefits. This is the first time this has happened for many people in the past two years, "said Casey Schwarz, Senior Counsel for Education and Federal Policy at the Medicare Rights Center, a non-profit organization.
The Social Security Administration determines annual cost-of-living adjustments based on an inflation gauge from the Department of Labor, the Consumer Price Index for employees and urban office workers, or CPI-W. This measure is slightly different from the more widely reported index that covers all urban consumers.
Both inflation indicators show that Americans face higher costs compared to last year.
The 2019 increase is in line with economists' forecasts. It does not change the outlook for consumer spending or economic growth.
"But without this increase, the real standard of living of the beneficiaries would decrease," said Joel Prakken, an economist at Macroeconomic Advisers, a forecasting firm.
Write to Eric Morath to [email protected] and Anne Tergesen to [email protected]
Source link
