No Cost of Living Increase for Recipients of Social Security

It’s all because the Consumer Price Index (CPI) hasn’t risen enough, thanks largely to lower energy costs.

The 0% COLA announcement from the Social Security Administration, which had been widely expected, affects 70 million people, about 60 million retirees plus disabled workers and spouses and children who receive benefits.

The typical retiree’s benefit is about $1,300 a month. “Have you checked the prices of meat lately?”

The government will keep benefits flat because inflation has been low, primarily thanks to lower gas prices.

In addition to the COLA freeze, many older Americans will be hit with a double whammy of a hefty increase in their Medicare Par B premiums tied to Social Security.

Regardless of inflation, the lack of a COLA isn’t sitting well with many seniors, especially those on a fixed income.

In July, Medicare actuaries predicted that monthly premiums would increase to about $159 for such beneficiaries, up from about $105. He has insisted that the cost of legislation to stabilize premiums, estimated at $7.5 billion to $10 billion, be offset by savings elsewhere in the federal budget.

Require Medicare, not Medicaid, to pay premiums for the approximately nine million beneficiaries who qualify for both programs.

For many other seniors, the stagnant benefits check will simply mean a lifestyle with even fewer frills. “It is about basic fairness”.

These are people who make less than $85,000 a year ($170,000 for couples filing joint tax returns) and have their monthly Part B premiums deducted from their monthly Social Security payments. Food costs are up 1.6 percent, with egg prices alone sitting 36.2 percent higher than where they were a year ago. This educational session will assist financial professionals in understanding the hold harmless provision and its impact, as well as to better equip them in consulting with clients about changes that may be necessary to their Social Security strategy.

“Social Security is the bedrock of retirement security for millions of Americans”.

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.

If the CPI-W increases, benefits will go up.

As per law, CPOLA is based on the government measure of inflation. On a fundamental level, the CPI-W tracks prices paid for an assorted basket of goods and services by a relatively small subset of the USA population.

A more accurate cost of living adjustment could help the government avoid this problem in the future. “On the other hand, the cost of proscription drugs is a huge factor, and those costs are going way up and just wallop seniors”.

Only twice before, in 2010 and 2011 since cost-of-living adjustments started, has there been no bump up in benefits.