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Social Security recipients getting 3.6% raise, first in two years
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 Wednesday.
The increase, which starts in January, is tied to a measure of inflation released Wednesday 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. Wednesday'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.
https://bottomline.msnbc.msn.com/_news/2011/10/19/8395741-social-security-recipients-getting-36-raise-first-in-two-years
