WISCONSIN (WFRV) – The Social Security Administration announced Thursday that social security benefits will increase to 3.2% for 71 million Americans by January.

“3.2 is better than not, and it’s not as good as 8.7,” Knuth Financial Life Planning owner and financial advisor Kay Knuth said of last year’s increase. “If you’re spending your money on going out to eat a lot, there’s much more inflation with those prices right now than eating at home for example. Making choices on your discretionary money so you have something left over, then the 3.2% can really be maximized.”

The Social Security Administration’s Cost-of-Living Adjustment (COLA) is determined by inflation rates, which currently stand at 3.7%.

“3.2 is not where inflation currently is, it’s where the Social Security Administration expects it to be,” Knuth Financial Life Planning financial advisor Kolby Knuth said. “As we see costs of goods, hopefully they’re able to keep up with those costs of goods. Everything from groceries to gas to clothes, it helps them to afford their daily living expenses.”

On average, a retired worker can expect to see an increase of $50 each month, totaling $1,907 compared to $1,846 from this past year. Financial advisors say that the increase is not something to be relied, especially because it does not match inflation.

“Making sure that at the end of each month you have a surplus of cash, try not to dip into those credit cards, and make sure you’re spending below what you’re making,” Knuth Financial Life Planning financial advisor Chris Hoffman said. “We did get an adjustment, the 3.2, but inflation is higher than that, so things are more expensive.”

While the percentage increase may not match where it currently is, Kay Knuth thinks that most Wisconsinites will be just fine.

“This whole increase is based on a year ago, so we’re kind of a year behind when looking at this CPI,” she said. “Things are cheaper to buy here, as well as, I think, people are more conservative in how they choose to spend their money.”

Jeff Daye, branch manager at Annex Wealth Management’s Appleton location, said that costs have risen in a number of categories and that the adjustment is needed for many Wisconsin residents.

“It’s a little bit down from where it was, but still a nice adjustment for next year,” he said. “Wisconsinites specifically have seen an increase in shelter, an increase in food and energy costs, so that will help assuage some of those costs, especially those retirees that are dependent on social security as an income source.”

Daye said that social security is not something to rely on, and that younger generations may receive proportionally less in social security benefits than what older ones have received.

“For the younger workers that are still looking to collect social security in the future, they would do well to plan outside of social security for their retirement future.”