Millions of Social Security recipients and federal retirees will get a 0.3 percent increase in monthly benefits next year, the fifth year in a row that older Americans will have to settle for historically low or no raises.
There was no increase this year. Next year's benefit hike will be small because inflation is low, driven in part by lower fuel prices.
The federal government announced the cost-of-living adjustment, or COLA, Tuesday. By law, the COLA is based on a government measure of consumer prices.
The COLA affects more than 70 million people — about 1 in 5 Americans.
The average monthly Social Security payment is $1,238. That adds up to a monthly increase of less than $4 a month.
More bad news for seniors: Medicare Part B premiums, which are usually deducted from Social Security payments, are expected to increase next year to the point in which they will probably wipe out the entire COLA.
By law, increases in premiums for most Medicare recipients cannot exceed their Social Security COLA. That's known as the "hold harmless" provision, and it protects the majority of Medicare recipients.
However, new enrollees and high-income retirees are not covered by the hold harmless provision, so they could face higher Medicare premiums. Those premiums will be announced later this year.
Millicent Graves, a retired veterinary technician, says Medicare and supplemental insurance premiums eat up nearly a third of her $929 monthly Social Security payment. And don't tell the 72-year-old from Williamsburg, Virginia, that consumer prices aren't going up. She says her insurance premiums went up by $46.50 this year, and her cable TV, internet and phone bill went up, too.
"I just lose and lose and lose and lose," Graves said.
More than 60 million retirees, disabled workers, spouses and children get Social Security benefits. The COLA also affects benefits for about 4 million disabled veterans, 2.5 million federal retirees and their survivors, and more than 8 million people who get Supplemental Security Income, the disability program for the poor. Many people who get SSI also receive Social Security.
Since 2008, the COLA has been above 2 percent only once, in 2011. It's been zero three times.
"This loss of anticipated retirement income compounds every year, causing people to spend through retirement savings far more quickly than planned," said Mary Johnson of the Senior Citizens League. "Over the course of a 25- or 30-year retirement, it reduces anticipated Social Security income by tens of thousands of dollars."
By law, the cost-of-living adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a broad measure of consumer prices generated by the Bureau of Labor Statistics. It measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education.
The COLA is calculated using the average CPI-W for July, August and September. If prices go up, benefits go up. If prices drop or stay flat, benefits stay the same.
Gasoline prices have fallen by more than 6 percent over the past year, according to the September inflation report, while the cost of medical care has gone up by more than 5 percent.
For seniors who don't drive much, they don't get the full benefit of low gas prices, said Max Gulker, a senior research fellow at the American Institute for Economic Research. Many seniors, however, spend more of their income on health care.
Graves said she appreciates lower gas prices, but the higher medical costs are a problem.
"I just have to rely more each month on cashing in investments," Graves said. "I'm lucky I can do that."
Some advocates complain that the government's measure of inflation doesn't reflect the costs many older Americans face. They note that the index measures prices for urban wage earners, not retirees.
"As prescription prices skyrocket and Medicare premiums and other health costs increase, many older Americans have understandable concerns," said AARP CEO Jo Ann Jenkins.
Vermont Sen. Bernie Sanders, who unsuccessfully ran for the Democratic nomination for president, said, "Seniors and disabled veterans need more help than a few extra dollars in their monthly checks. These are the people who built this country — our parents, our grandparents and our soldiers."
Sanders has been pushing to expand Social Security benefits for years. His opponent in the Democratic presidential primary, Hillary Clinton, has embraced the idea of expanded benefits for certain low-income retirees.
Clinton would pay for it by raising taxes on "the highest-income Americans."
Social Security has been largely absent from the presidential campaign. Breaking with other Republicans, GOP nominee Donald Trump has pledged not to cut benefits. However, he has offered few specifics on how he would address Social Security's long-term financial problems.
Social Security is financed by a 12.4 percent tax on the first $118,500 of annual wages, with the worker paying half and the employer paying the other half. The amount of wages subject to the payroll tax will go up to $127,200 next year, the Social Security Administration said.
About 173 million workers will pay Social Security taxes next year — about 12 million of them will face higher taxes because of the higher cap, the agency said.