Reduced inflation means no Social Security COLA in 2011

Since 1975 when Congress instituted the cost of living adjustment (COLA) for Social Security payments, only once has there failed to be a rise. That was this year. According to the Associated Press, 2010 had been the first year without a COLA for Social Security, and 2011 will be the second. The reason for this, reports the Social Security Administration, is that rising cost of living is too reduced.

The next issue in the legislature is the Social Security COLA

The annual COLA that is designed to come to those retired and disabled on Social Security is what 58 million Americans in these programs want each and every year. Each Social Security recipient would get $250 with the bill the House of Representatives will be voting on in Nov as this is the second year that there hasn’t been a raise in benefits. House Speaker Nancy Pelosi hopes to move the bill through the House, however the AP suggests that there is already stiff opposition in the Senate. Such news will no doubt add to the already heavy burden numerous retired Americans carry. Savings and home values are still low because of the recession, and the cost of living continues to rise as COLAs fall by the wayside.

“We’re a little bit upset because our bills are going up and our Social Security isn’t,” said retiree Betty Dizik, 83, to the AP. Dizik’s only source of income is a $1,200 month Social Security check. Her situation is not unique. It’s just like every person else’s. Social Security checks are about that size. In fact, $1,072 is the average each month. Based on the Social Security Administration, Social Security checks are the only source of income for 64 percent of those receiving it. This is what was reported in 2008.

The last Social Security COLA had been a big one

Workers and employees pay a 6.2 percent payroll tax right now for Social Security. The tax nevertheless applied to a maximum wage cap. This cap is at $106,800 right now. With the last Social Security COLA in January 2009, payments went up 5.8 percent, the largest increase in 27 years, reports the AP. An boost in energy prices led to that abnormally large COLA.

The law has made it so the COLA cannot rise again for a when. Consumer prices have to go above 2008 levels before that could happen. Social Security Administration anticipates that this will occur in 2011, leading to a 1.2 percent COLA that will hit in January 2012.

Articles cited

Associated Press

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