social security COLA adjustment

Seniors Will Get Cost-of-Living Adjustment from Social Security in 2010: Report

by Staff | October 18th, 2011

Senior citizens should enjoy a cost-of-living adjustment (COLA) from the Social Security Administration in January, according to Massachusetts nonprofit group American Institute for Economic Research (AIER). This will be the first time in two years that benefits recipients will get a COLA, which is designed to ensure that the agency’s benefits account for inflation.

The Christian Science Monitor reports that prior to this two-year impasse on COLA, the rate had increased for beneficiaries every year since 1975. The Great Recession, however, lowered consumer prices so that COLA couldn’t increase.

“It’s important to remember that the typical older American today lives on an income of roughly $20,000, and Social Security keeps nearly a third of older Americans out of poverty,” said Tiffany Lundquist, spokeswoman for the AARP. “After two years with no COLA and increasing costs for food, utilities and health care, every dollar of the modest average benefit of $14,000 is critical.”

AIER estimates that the COLA will be somewhere between 3.5 and 3.7 percent. The exact adjustment is expected to be announced on Wednesday or soon thereafter when the U.S. Bureau of Labor Statistics issues its Consumer Price Index for Urban Wage Earners and Clerical Workers for September 2011.

“The COLA index is based on average price of goods and services as consumed by workers, not by retired people,” AUER research fellow Polina Vlasenko told The Christian Science Monitor. “Retirees tend to spend more on health-care and goods and services, and those prices increase faster than the national average. So COLA may not fully compensate for what that they spend their money on. The index isn’t ideal for retired persons, but it is what it is.”

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Do you think the Social Security Administration’s COLA adjustment is high enough?

If you need help with your Social Security Disability benefits, contact the Social Security Disability lawyers at Fleschner, Stark, Tanoos & Newlin.

Chained CPI Formula Would Rip Off Needy Seniors, Says L.A. Times

by Staff | July 15th, 2011

A new Los Angeles Times editorial makes no bones about its opposition to a proposed change to the way inflation is calculated for Social Security beneficiaries.

“Of all the ways policymakers in Washington show they have absolutely no conception of how their tinkerings with the federal budget affect average Americans, one stands alone,” writes Michael Hiltzik. “That’s the proposal to change the formula that determines annual cost-of-living increases for people on Social Security.”

Some lawmakers have suggested that the chained consumer price index (CPI) formula be used instead of the agency’s current method for calculating COLA (Cost of Living Adjustment).

Unlike the consumer price index that’s traditionally been used to calculate benefit increases, the chained CPI formula takes into consideration the economy at large—assuming that as prices of goods and services rise consumers will make substitutions and spend less money.

The chained CPI and the traditional CPI tend to differ by two- to three-tenths of a percentage point annually. According to the Los Angeles Times, this would be enough to cut seniors’ benefits by nearly 10 percent over 30 years.

Read more.

Do you support the use of the chained CPI formula to calculate inflation?

If you need help with your Social Security Disability benefits, contact the Social Security Disability lawyers at Fleschner, Stark, Tanoos & Newlin.