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Instead, the modest increase announced by the Social Security Administration will simply keep beneficiaries in-check with the ever-inflating economy.
Kenneth Apfel, commissioner of the Social Security Administration, announced that 44.2 million Americans who draw Social Security would see an increase in their monthly checks. The increase of 2.4% will be the largest increase in over three years. The move was prompted by the Cost of Living Adjustment (COLA) commission, which studied the effects of inflation on Social Security recipients, and took the initiative to propose the change.
The increase will take place effective January, 2000, in an effort to help all beneficiaries preserve their buying power. The increased income is not meant to create a swell of extra money in people's pockets. Instead, the move is designed to keep payments level with the growth of the economy.
While the amount paid by Social Security will rise, the amount withheld for Medicare will not. Social Security takes
out money for those who receive Medicare. For those who rely on Medicare
for health coverage, monthly Medicare premiums will remain at their current
levels. This will allow the increase in monthly checks to go towards much
needed products such as prescriptions, which are not covered by Medicare.
With monthly net income rising, some Social Security beneficiaries may be lulled into thinking that they will soon have extra money to splurge on items that they haven't been able to in the past. After factoring in the cost of inflation on consumer goods, this is not the case. Inflation is rising at about the same rate each year, so recipients will not see any increased buying power as a result. The annual announcement also brought more calls from lawmakers to add reserves to the Social Security system. With Baby Boomers quickly approaching retirement, Social Security will likely become insolvent in 2034, unable to handle the demands of a graying population. To date, lawmakers in Washington have earmarked part of the budget surplus to shore up to Social Security Program. However, with Congressional leaders and the Clinton Administration constantly locked in partisan politics, nothing is certain.
In fact, the letters contain strong statements urging Americans to make sure that they do not just rely on Social Security as their only source of income after they retire. That is a sentiment echoed by many professional financial planners and CPAs, as well. SaveWealth advises all of its clients that you'll need to generate approximately 60-70% of pre-retirement income to maintain your current standard of living. By some estimates, Social Security will provide less than 40% of your retirement income, leaving the responsibility for the remainder of the income on your shoulders.
To learn more about effective retirement planning, and how you can ensure you are taken care of in your "golden years," contact us today!
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Is
Social Security Getting Any Better?
Larger
Checks Coming
The
average monthly check will rise from $785 to $804. Supplemental Security
Income (SSI) will also increase by 2.4%, meaning $500 checks will go up
to $512 a month. SSI receivers who are married will see an even greater
increase, with the average check bouncing from $751 to $769. 
In
a massive mailing campaign that began this week, the Social Security Administration
is explaining the new changes, while reminding us about the need for effective
retirement planning. 
