Unfortunately, last week, CBS News reported that for the third time in the last 40 years, it is unlikely that there will be an annual cost-of-living adjustment (COLA) for Social Security recipients in 2016.
The news outlet reported that the lack of a raise would affect about “60 million retirees, disabled workers, spouses and children who get Social Security benefits.
The reason why there may be no COLA is that inflation over the last year has been low. COLAs are tied to the Consumer Price Index (CPI), which measures the costs of items like gasoline, food and housing. Since 1975, Social Security payments have had a COLA of about 4.1 percent, according to CBS News.
“It’s a very high probability that it will be zero,” economist Polina Vlasenko, a research fellow at the American Institute for Economic Research told CBS News. “Other prices – other than energy – would have to jump. It would have to be a very sizable increase that would be visible, and I don’t think that’s happened.”
The only years without increases previously were 2009 and 2010. COLAs are calculated by comparing consumer prices in July, August and September, each year, with prices in the same three months from the previous year. If prices for items rise, COLAs usually are awarded. If they drop or are stagnant, benefits stay the same.
Some economists believe that tying benefits to the CPI is not a good way to determine COLAs. They say the formula is based on the buying power of younger, working Americans—that it does not accurately reflect how retirees or the disabled are able to spend money.
Our Tulsa Disability Attorneys Can Help Your SSDI Claim Be Successful
It is unfortunate that there will be no COLA for Social Security recipients. Many people who receive Social Security benefits, whether retired or disabled, live very modestly. In fact, most Social Security Disability Insurance (SSDI) recipients receive between $700 and $1,700 per month. Any type of raise could help them tremendously.
Although the news about the COLA for 2016 is not positive, it should not stop you from applying for Social Security benefits, if you are eligible. Talk to our Tulsa disability attorneys if you would like more information about SSDI.
You can reach us directly by calling the numbers located on this page or by filling out the case review form.
Troutman & Troutman, P.C. – Tulsa Social Security Disability attorneys