August 25, 2009
Social Security Cost of Living Adjustments (COLA)
Indiana Social Security benefits recipients look forward to the annual Cost of Living Adjustments (COLA) they receive each year. COLA is the annual increases that recipients receive in their benefits to offset inflation in the economy. The Social Security Administration (SSA) began these automatic increases in 1975. Many disability benefits recipients rely on these increases each year to keep up with inflation.
In 2009, Social Security recipients received a 5.8% increase in their monthly payments. This is the largest increase since 1982. As of this week, the SSA’s trustees are predicting that Social Security recipients may not receive a COLA increase for the next two years. This is being justified mainly because 2009 energy prices are below 2008 energy prices. The SSA is predicting that there will not be an increased inflation this upcoming year, therefore there will be no need for a cost of living adjustment. Many people argue that while inflation may be down next year, the medical and healthcare cost will continue to rise. Ultimately, this will affect those with high medical & prescription expenses or Medicare recipients. Approximately 50 million disabled and retired Americans receive Social Security benefits. While some of these Americans may need to just watch their spending in the next two years, others may be highly affected. Although it is law that Social Security COLA can not be negative causing a decrease in benefits, recipients who get Medicare deducted from their payments may be impacted because Medicare costs will continue to increase which ultimately causes a decrease in the monthly benefits payment.
Be aware that SSA’s consideration of eliminating the COLA in 2010 & 2011 is to protect the system from depleting and drying out. As a result, all Social Security recipients will benefit by continuing to receive their monthly payment.