It's official! Here's how much your Social Security benefits are set to rise in 2018

Social Security is arguably the most important social program for seniors. Each month, the Social Security Administration (SSA) divvies out more than 61 million stipends to eligible beneficiaries, of which 42 million are retired workers.  Without this income, many of these seniors would likely struggle to make ends meet, especially with SSA data noting that 62% rely on Social Security for at least half of their monthly income.


The most important time of the year has arrived for Social Security recipients


Every year, there is perhaps nothing more important for these folks than the annual cost-of-living adjustment (COLA) announcement from the SSA. COLA is nothing more than the inflation-adjusted "raise" that beneficiaries receive from one year to the next.

Social Security's inflationary tether is the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. It takes it account eight major spending categories that cover various goods and services and allows the SSA to determine an appropriate inflationary raise for eligible beneficiaries from one year to the next. When calculating COLA, the SSA averages the CPI-W reading from the third quarter of the previous year (July through September) and compares it to the third-quarter reading from the current year. If the average increases, then beneficiaries receive a commensurate raise that's rounded to the nearest tenth of a percent. If it declines, then benefits remain static from one year to the next.

On Friday, Oct. 13, at 8:30am ET, the Bureau of Labor Statistics (BLS) released its September 2017 inflation data, which was the last piece of the puzzle needed to determine what COLA should be for the upcoming year. Let's take a closer look at what retired workers, the disabled, and survivors can expect.

RELATED: The best states to live off a Social Security check: 

Best places to live on a Social Security check
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Best places to live on a Social Security check


Springfield, located in the southwest corner of Missouri, is among the most affordable cities to live when you have $0 saved for retirement. According to Numbeo's Cost of Living Index for 2017, the rent in Springfield is less than 19 percent of that in NYC while the general cost of living plus rent is 41.09 percent.

The average Social Security check each retiree receives here is $1,300.51. That's good news considering you can get a downtown one-bedroom apartment for around $507, or $450 elsewhere.

Best of all, Springfield is a lively town close to recreational areas. Springfield/Greene County has over 100 parks, including Lake Springfield Park, which is perfect for kayaking and canoeing. And you'll find lots of bike paths in and around town as well as lakes and streams popular with fishermen. 

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When you're trying to make the most of your Social Security check, look no further than Athens. The city of some 200,000 residents has a cost of living that is 6.2 percent below that of the national average, according to Forbes. Your cost to rent in Athens is less than one-quarter than what you would pay in NYC and, when you factor in groceries, transportation, restaurants and other day-to-day expenses, you'll live in Athens for just 43.88 percent of what you'd pay in the Big Apple.

Since the town is the home turf of the University of Georgia, you'll find lots of low-cost eateries as well as cultural activities. The art and music venues are impressive. Athens is also known for its annual bicycle races called the Twilight Series.

So, how much does a one-bedroom apartment cost in Athens? Count on paying a little over $700 for a downtown apartment and around $600 elsewhere. Considering the average monthly Social Security retirement check in Georgia is $1,304.44, you'll have plenty of cash leftover after bills.

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If you prefer year-round warm weather, consider Tucson, a large city in Arizona's Sonoran Desert. Tucson's cost of living is delightfully low, with rent prices less than a quarter of NYC rent. You can find a one-bedroom apartment for $578 if you don't want to be downtown — $686 if you do.

When you include rent, groceries and other living expenses, a Tucson resident spends only 45.17 percent of the amount spent by NYC dwellers. And, the typical Social Security retirement check here is above the national average, at $1,343.51.

Over half a million people live in Tucson, and the city continues to grow. The downtown is compact, with a small historic district. Nearby you'll find the University of Arizona. Tucson is an attractive city surrounded by several high, forested mountain ranges, including the Santa Catalina Mountains.

See: Here's What an Average Apartment Costs in 50 U.S. Cities 

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Mobile is another city with a cost of living significantly lower than the U.S. average. Move here for retirement and you'll pay just 24.27 percent of NYC rental prices. That means you can get a one-bedroom apartment for between $600 and $650 just about anywhere you live in Mobile.

Once you include food, transportation and other expenses, you'll be paying less than half — 46.28 percent — of NYC prices. But, average Social Security checks are a little lower than what'd you expect, at $1,285.68.

Mobile is located on the Gulf Coast and has a rich history as an antebellum seaport. Today, it remains a major port and is sometimes compared to New Orleans — except a little more laid back.

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Rent in Shreveport comes in at a monthly cost between $700 and $740, depending on your proximity to the city center.

Unfortunately, the average Social Security benefit in Louisiana is just $1,212.05, the lowest of any state, according to a GOBankingRates study on the best and worst states to retire rich.

Still, your cost to live in Louisiana is just 47.08 percent of that in NYC. Meanwhile, Shreveport is a cultural hub in the tri-state area of Arkansas, Louisiana and Texas.

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Billed as "The Biggest Little City in the World," Reno living comes with a lot perks, most notably a cost of living that's less than 50 percent of NYC. Rent alone is just 31.04 percent the cost of NYC dwellings. Surprisingly, it's more expensive living outside of the downtown area. You'll pay around $750 for a one-bedroom apartment in the city center, but closer to $813 outside of it.

Reno's average Social Security check is $1,313.43, and you'll have plenty to do with your leftover money. Truckee River provides access to rafting, kayaking and fishing. There's also tons of festivals happening in Reno at any point in time, like the Reno River Festival and Artown Festival.

Be Prepared: 5 Social Security Changes to Watch for in 2017 

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Albuquerque is New Mexico's largest city, and it's one of the cheapest places to live. Its cost of living is similar to Shreveport, with rent near the city center at about $760, or about $640 outside the city.

In 2016, U.S. News & World Report named Albuquerque one of the 50 best places to live in America. It described this desert city's appeal as "a blend of modern times and Native American history." Albuquerque has a diverse population and is perhaps best known for its annual International Balloon Fiesta.

You'll also enjoy Old Town, where you'll find numerous restaurants, museums and galleries. One downside for retirees: The average Social Security retirement check received by folks living in Albuquerque is $1,227.11. So, be prepared when your check arrives

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In a rating of the top states for businesses in 2016, CNBC named Oklahoma the sixth-best state for cost of living. Oklahoma City, the state's largest city, has rent costs between $625 and $850. Between rent, groceries and utilities, you can expect to spend just 47.93 percent what you'd spend in NYC, a comparable amount to living in Reno or Mobile.

Average Social Security benefits come in at $1,277.14 — not the best, but also not the worst.

While you may not think of Oklahoma City as offering a stunning cityscape, National Geographic named it a must-see location in 2015. It gave shout outs to its community boathouse, new West River Trail and rebuilt MidTown.

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Rent is low in Fort Wayne, about 22.73 percent of what you might pay in NYC. Retirees in this city can find a one-bedroom apartment for around $631, making it an affordable place to live. In fact, the cost of living in Indiana is an estimated 16 percent lower than the national average, according to data from AreaVibes. And Niche, which ranks and review neighborhoods, named Fort Wayne the cheapest city to live relative to income.

Average Social Security retirement benefits are a healthy $1,379.93. Once there, you'll enjoy the Foellinger-Freimann Botanical Conservatory, historical museums and the Black Pine Animal Sanctuary, among other attractions.

Up Next: 20 Unsettling Things You Need to Know About Social Security 

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Here's how much your Social Security benefits are set to rise in 2018


As reported by the BLS, the CPI-W increased at a rapid 0.6% pace in September, or 2.3% on a 12-month non-seasonally adjusted basis in September. This large increase, like August, was precipitated by hurricanes Harvey and Irma, which pushed energy prices notably higher as refineries and drilling platforms were shut down. Gasoline prices rose 6% in August and 13% in September, which was the primary reason for the lift in overall inflation rates. While hurricanes aren't good news, in this rare instance they are for Social Security recipients.

With this in mind, let's check the math.

According to SSA data logged from the BLS , here are the CPI-W reading from 2016 in the July through September months:

  • July (234.771)
  • August (234.904)
  • September (235.495)

This works out to an average reading in the third quarter of 2016 of 235.056, and this figure serves as the baseline.

Now let's take a look at SSA logged data for 2017 in July and August, as well as the final piece of the puzzle reported today by the BLS for September:

  • July (238.617)
  • August (239.448)
  • September (240.939)

These three reading average out to 239.668 over the third quarter. If we compared the two, the Q3 reading from 2017 increased by 1.96% from the baseline, which when rounded works out to a 2% aggregate increase. In other words, Social Security benefits are going to rise by 2% in 2018. That's the highest increase over the past six years, and a modest bump given the 0% COLA received in three of the past eight years.


Here's what a 2% COLA means for you


So, what does a 2% COLA actually mean for you? Put simply, you'll receive 2% more per month in 2018 than you were paid in 2017. According to the August 2017 snapshot from the SSA, the average retired worker was bringing home $1371.14 a month.  Essentially, it means the average retiree can expect around $27 more a month, or about $329 more a year in 2018. That's certainly better than the paltry 0.3% COLA increase for 2017.

However, there are two caveats that Social Security beneficiaries need to be aware of.

The first that you should be aware of is Medicare Part B premium costs. If you're already enrolled in Medicare, and you've been protected from high inflation rates in Part B premiums in recent years by the hold harmless, you're probably not going to see all of your 2% COLA increase. Instead, part or all of your increase could go toward playing "catch up" on your Part B premiums that are likely still well below the going monthly rate for newly eligible Medicare beneficiaries.

Secondly, it's still highly probable that your COLA of 2% isn't going to adequately cover the rising cost of expenses that today's seniors are facing. In 33 of the past 35 years (not counting 2017), Social Security's COLA has been lower than the medical care inflation rate. This is because the CPI-W factors in the expenditures of working-age Americans, whereas seniors tend to spend a considerably higher percentage of their income on healthcare costs. Of late, housing costs, such as rents, have been rising at a quicker pace, too.

Ultimately, a 2% COLA is a modest win for seniors and beneficiaries as a whole, but it's nothing to cheer in excess about given the probability that Part B premiums will steal some (or all) of that thunder for about 70% of recipients, and the increase may not cover the true inflation that most seniors are dealing with.

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