CLEVELAND — In a little more than two months, social security recipients are getting the biggest cost of living adjustment in 40 years. About 64 million people are cashing in on social security benefits. A cost of living adjustment from the Social Security Administration could translate into an average benefit increase of $92 per month.
However, the increase won't be considered extra income for many, according to local financial professional Ben Grosko with Integrated Wealth Management.
“Most retirees are paying $148.50 for the Medicare Part B premium right now or next year. With that increase, that's actually going up to $150 as well,” he said.
The increase in benefits is tied to those consumer price increases, job shortages and the pandemic.
"Cost of living adjustment is totally tied to inflation or the consumer price index,” said Grosko. “If you're going to the pump, we know we're paying probably 42 to 50% more for gas. I just went to the grocery store, filled up a basket of groceries. I couldn't believe how much I was paying.”
Income taxes could also cut the value of monthly checks for retirees. So, grosko says retirees should start planning to sure they're not relying on social security alone.
“You need about 80 percent of your pre-retirees income to make sure you can really go enjoy your retirement that you have always dreamed of.”
But how can you truly maximize your social security benefits? Grosko says the rules are complex, but sitting down with a financial planner to understand how much money you're working with, your full retirement age and deciding when you will claim your benefits, is key.
“If you don't have income coming from different sources, you've got to make the right decision,” Grosko said. “If you start taking it early at 62, it takes about 30% off your full retirement benefit. Now, if you delay all the way to 70, you actually get an 8% increase.”
Representatives Stephanie Howse and Juanita Brent testified in favor of House Bill 416 Wednesday, called the Ohio Retirement Savings Program, an auto-enrollment retirement savings program for private sector employees in addition to social security benefits. The bill was introduced the legislation for the program in September.
The legislation would require a private sector employer to deduct a percentage of an employee’s paycheck, unless the employee opts out. However, a similar proposal from both lawmakers in 2020 did not pass in the last legislature. The bill is now pending in the Ohio House Insurance Committee.
If you're a social security recipient, you can expect a notice around late November or early December saying how much of an increase you can expect to receive. For more information, click here.