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Social Security recipients to get 3.6 percent COLA

By Associated Press

POSTED:
LAST UPDATED: 05:48 a.m. HST, Oct 19, 2011


WASHINGTON » Some 55 million Social Security recipients will get a 3.6 percent increase in benefits next year, their first raise since 2009, the government announced today.

The increase, which starts in January, is tied to a measure of inflation released this morning.

About 8 million people who receive Supplemental Security Income will also receive the 3.6 percent cost-of-living adjustment, or COLA, meaning the announcement will affect about one in five U.S. residents.

There was no COLA in 2010 or 2011 because inflation was too low. Those were the first two years without a COLA since automatic increases were adopted in 1975.

Monthly Social Security payments average $1,082, or about $13,000 a year. A 3.6 percent increase will amount to about $39 a month, or just over $467 a year, on average.

Advocates for seniors said the raise will provide a much-needed boost to the millions of retirees and disabled people who have seen retirement accounts dwindle and home values drop during the economic downturn. Economists say the increase should provide a modest boost to consumer spending, which should help the economy.

Still, many seniors feel like they have been falling behind.

Nancy Altman, co-chair of the Strengthen Social Security Campaign, said she is pleased Social Security recipients will get a raise next year. But, she added, "The COLA is still not enough to keep up with health care costs."

"Despite the absence of a Social Security COLA, over the last two years out-of-pocket health care costs rose 14.1 percent for seniors and people with disabilities, effectively reducing the value of Social Security benefits," Altman said.

Some of the increase in January will be lost to higher Medicare premiums, which are deducted from Social Security payments. Medicare Part B premiums for 2012 are expected to be announced next week, and the trustees who oversee the program are projecting an increase.

Most retirees rely on Social Security for a majority of their income, according to the Social Security Administration. Many rely on it for more than 90 percent of their income.

"For people at that income level every dollar makes a difference, particularly coming in this economic downtown," said David Certner, legislative policy director for AARP. "None of them feel as if their cost of living was not increasing in the last couple of years."

Federal law requires the program to base annual payment increases on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Officials compare inflation in the third quarter of each year -- the months of July, August and September -- with the same months in the previous year.

If consumer prices increase from year to year, Social Security recipients automatically get higher payments, starting the following January. If price changes are negative, the payments stay unchanged.

Social Security payments increased by 5.8 percent in 2009, the largest increase in 27 years, after energy prices spiked in 2008. But energy prices quickly dropped and home prices became soft in markets across the country, contributing to lower inflation in the past two years.

As a result, Social Security recipients got an increase that was far larger than actual overall inflation. However, they can't get another increase until consumer prices exceed the levels measured in 2008. Today's announcement shows that prices have exceeded those measured in 2008, said Polina Vlasenko, an economist at the American Institute for Economic Research, based in Great Barrington, Mass.







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gary360 wrote:
By who's math was inflation to low? Sure looks like someone is looking for votes.....well, you never did have my vote.
on October 19,2011 | 05:16AM
KeithHaugen wrote:
For the past couple of years seniors on Social Security have slipped further behind, and while the increase is appreciated, it does not even come close to keeping up with the current increases in cost of living, including health costs.
on October 19,2011 | 05:42AM
1local wrote:
Its not just Seniors who will benefit - drug addicts and those inflicted with Aids will also get the increase. The increase will put further strain on the fund lessening the likelihood that it will be able to remain solvent for future generations...
on October 19,2011 | 06:05AM
bender wrote:
Have to agree. They use a very limited set of tools to measure inflation. And they want to narrow the guidelines even further going into the future.
on October 19,2011 | 06:10AM
nodaddynotthebelt wrote:
What? Coca Cola for social security recipients? No, just kidding folks. Lighten up. So where is all this money coming from?
on October 19,2011 | 09:18AM
RandyC73 wrote:
It's about time; after 2 years of suffering we are finally getting some relief! Prices kept going up on food, medicine, rent and the goverment only made excuses. T
on October 19,2011 | 08:37PM
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