Recipients of Social Security retirement benefits and Supplemental Security Income (“SSI”) benefits are set to receive news that they have not heard for two years – their benefit levels will be going up. A yearly increase in benefits had been the norm, at least from 1975 until 2010. 2010 and 2011 were the first consecutive years for which there was no cost of living adjustment (“COLA”). More details on the change are available from a Tulsa SSI attorney.
The lack of increase stems from the way that the Social Security Administration (“SSA”) measures the cost of living. It uses the consumer price index to measure inflation by looking at the costs of consumer goods. Social Security benefits cannot, by law, go down, so when the consumer price index goes down or stays flat, benefits stay the same. The index actually fell in 2010, and prices did not exceed their previous high until recently.
At least one problem with using the consumer price index for Social Security benefits is that it overlooks what many older Americans and disabled Americans purchase. They spend more on health care goods and services than other Americans. Health care costs rise much faster than other costs, so the consumer price index is not always a good gauge of how far a dollar goes for everyone.
Financial experts expect that the COLA will be between 3.5 and 3.7 percent and will factor into benefits starting in January 2012. This could mean a lot for many beneficiaries – an AARP spokesperson noted that Social Security keeps a third of older Americans out of poverty. How much will the increase in Social Security benefits affect your financial situation?
Troutman & Troutman, P.C. – Tulsa Social Security disability lawyers