Will social security increase offset retiree costs?
Seniors wonder whether 1.7 percent hike next year will be enough to cover fast-rising health care expenses.
Nearly 62 million Americans will get, on average, $21 more a month next year. The Social Security Administration announced the cost of living adjustment for 2013, and it's 1.7 percent, about half of what it was last year.
But retiree Dana Meyer says something is better than nothing.
"It's kind of a relief, you kind of breathe a sigh of 'thank goodness,'" says Meyer.
Meyer factored in the social security cost of living adjustment -- or COLA -- before she decided to stop working in 2009. "We counted on a 2 percent increase in social security COLA," she says. "And based on that we were pretty sure it would be safe to retire."
But the financial crisis pushed the COLA down to zero for 2010 and 2011, which, for Dana Meyer, meant tightening an already tight budget. She says the extra money this year will most likely go to savings or prescription drug costs.
"We keep a monthly spread sheet of the medications that we've purchased," says Meyer. "And we have seen those go up quite a bit."
David Certner is with AARP. He says a cost of living adjustment for 2013 is good news for retirees, but not good enough. "A typical senior spends one-fifth of their entire income on health care," says Certner. He says the Consumer Price Index, which helps the Social Security Administration set the COLA, is based on the price of goods that working consumers purchase. That means it doesn't take into account retirees and their biggest expense: health care purchases.
Danielle Holland, a vice president with the Insured Retirement Institute, echoes Dana Meyer's sentiments about the Social Security COLA for 2013.
"Again, this is wonderful," says Holland. "Great news that there is this increase."
But Holland adds that retirees are still waiting to see if their Medicare Part B premiums go up in 2013. If they do, as projected, that could eat up to 50 percent of the average COLA increase for 2013.