The Social Security Administration recently announced the highest cost-of-living increase since 1991, setting the adjustment at 4.1 percent for more than 52 million retired and disabled recipients.
Starting in January, checks will increase an average of $39. Last year's increase was 2.7 percent, and the 1991 increase was 5.4 percent.
Since 1975, monthly checks have been automatically adjusted based on the Bureau of Labor Statistics' Consumer Price Index. The amount of the adjustment is based on changes between the third quarter of the previous year and the third quarter of the current year. The CPI produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services.
The CPI has seen a huge rise in energy costs recently, and, in January, Medicare premiums are expected to use a quarter of the Social Security increase. Also in January, a popular premium Medicare program will charge a monthly fee of about $32.
