Social Security recipients will get a 2% increase in benefits in 2018, an amount slightly lower than what was 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 boost is the highest since a 3.6% bump in 2012. The average person will get about $25 more a month. The average monthly Social Security payment is $1,258, or about $15,000 a year.
The rate of the increase is tied to the Consumer Price Index, an inflation gauge.
The Social Security Board of Trustees projected in July that this year's increase would be 2.2%. Though it fell short of that amount, it came after an increase of 0.3% for 2017 and no change in 2016.
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."
Some conservatives said the inflation index is too generous because when prices go up, people change their buying habits and buy cheaper alternatives.
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 will jump 1.2% to $128,700.
The government will increase the earnings limit for retirees younger than 66. The limit for that category will rise 0.7% to $17,040, so their benefits will fall by $1 for every $2 above that amount that they earn.
Contributing: Associated Press
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