People who make resolutions on money matters tend to feel better about the state of their finances, said Ken Hevert, senior vice president of Retirement at Fidelity.
Social Security recipients will get a 2% increase in benefits in 2018, which is slightly lower than projected this summer but up sharply from the past two years.
The cost-of-living adjustment (COLA) covers more than 61 million Social Security beneficiaries and more than 8 million recipients of Supplemental Security Income benefits. Some people get both.
The average person will get about $25 more per month.
The rate of the increase is tied to the Consumer Price Index, an inflation gauge.
The Social Security Board of Trustees had projected in July that this year’s increase would be 2.2%. While it fell short of that amount, it came after an increase of 0.3% for 2017 and no change in 2016.
More: You’re going to get less in Social Security than your parents
More: The ins and outs of applying for Social Security benefits
More: 16 things to know before you begin taking Social Security benefits
The hike is the highest since 2012’s 3.6%.
For upper-income retirees, the gains will be partially offset by an increase in the maximum amount of earnings subject to Social Security tax, which is jumping 1.2% to $128,700.
The government is also increasing the earnings limit for young recipients, above which benefits are reduced. The limit will rise 0.7% to $17,040 for people younger than 66, so their benefits will fall by $1 for every $2 above that amount that they earn.
The average monthly Social Security payment is $1,258, or about $15,000 a year.
Advocates for seniors claim the inflation index doesn’t accurately capture rising prices faced by seniors, especially for health care.
“It’s squeezing them. It’s causing them to dip into savings more quickly,” said Mary Johnson of The Senior Citizens League. “The lifetime income that they were counting on just isn’t there.”
More: Start planning for possible tax law changes
More: 3 careless ways you’re losing cash — and how to avoid them
More: Guess which workers stand to retire the richest
Some conservatives argue that the inflation index is too generous because when prices go up, people change their buying habits and buy cheaper alternatives.
President Donald Trump has promised that his staffers will reduce federal spending by $10.5 trillion over 10 years. It may be a big challenge but President Trump plans to start the process by gutting social security.
Contributing: Associated Press
Follow USA Today reporter Nathan Bomey on Twitter @NathanBomey.
Read or Share this story: https://usat.ly/2wSkY9p