Low inflation and recession have caused Social Security to abandon a cost of living adjustment (COLA) for the second time since COLAs were instituted by Congress back in 1975. Now the Associated Press suggests that there can be no Social Security COLA in 2011. The reason for this, accounts the Social Security Administration, is that inflation is too low.
The next issue in congress is the Social Security COLA
The annual COLA that is supposed to come to those retired and disabled on Social Security is what 58 million Americans in these programs want each year. Each Social Security recipient would get $250 with the bill that the House of Representatives could be voting on in November as this is the second year that there hasn’t been a raise in benefits. The bill will go through the House fast if House Speaker Nancy Pelosi gets her way. Of course, the Senate is quite opposed to the bill, accounts the AP. The retired Americans in the country already are a heave burden, and this would make that burden worse. Home values and savings continue to stay really reduced. Also, the recession has brought on the cost of living to go up although COLAs have stayed the same.
According to retiree Betty Dizik who’s 83, “We’re a little bit upset because our bills are going up and our Social Security is not.” This is what the AP reports. The $1,200 a month Social Security check coming in for Dizik is her only source of income. And her situation is far from unique. $1,072 a month is the average amount a Social Security check brings in. In 2008, 64 percent of those getting Social Security reported it to be their only income, based on the Social Security Administration.
Social Security COLA last time was massive
Social Security is currently supported by a 6.2 percent payroll tax paid by workers and employers. The tax nevertheless applied to a maximum wage cap. This cap is at $106,800 right now. The AP explains that January 2009 had been the past Social Security COLA which had the largest boost in 27 years with a 5.8 percent increase. An increase in energy prices led to that abnormally large COLA.
By law, a Social Security COLA won’t occur again until consumer prices rise above 2008 amounts. 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
msnbc.msn.com/id/39684354/ns/business-eye_on_the_economy/
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