CLEVELAND - Does your income match the growing costs of living your life? The federal government said people on Social Security only need about four more bucks a month to cover it.
It's all part of an announcement that involves the Cost of Living Adjustment for next year. It adds up to 0.03% and on average will mean almost a $4/month raise.
The Cost of Living Adjustment affects more than 70 million people across the country. The 0.03% raise is low. "Since the 2008 financial crisis, we've averaged 1.2%. Historically, it's around 2.7% percent,” said Financial Coach Willie Schuette from The JL Smith Group in Avon. He said it’s a tough announcement.
Especially when we found Medicare Part B premiums are expected to increase next year and will probably wipe out that four bucks-a-month raise.
Then, we found the U.S. Energy Information Administration projects a 9% increase in natural gas prices and a 3% jump in retail electric prices. That's 3% not 0.03%. "Tragic is a little too strong but it's unfortunate that we were not able to get a higher cost of living for today's retirees,” said Schuette.
He also told us retirees have three ways to combat rising costs not matching cost of living adjustments: adjust their spending by not going out to eat as much, for example; manage their risks in investments to hopefully get a higher rate of return on your portfolio; and, believe it or not, find work. "You can do some of today's Gig economy and you can be an Uber driver, a Lyft driver, (or) you could use your home for an Air B&B to create some extra income,” said Schuette.
There is good news and bad news for Gen X-ers and Millennials. Schuette thinks Social Security will be around for a long time. The bad news is we all have to start saving more a lot earlier to help cover our needs including health care down the line.