People on Social Security for 40 years have depended on the little cost-of-living adjustments, or COLA, to help them keep up with rising prices.
Many won’t like the news that they won’t get an annual COLA increase in the new year. They didn’t like it when it happened in 2010 and 2011 as the country had allegedly pulled out of the Great Recession. The COLA jumped to 3.6 percent in 2012, fell back to 1.7 percent in 2013, dropped to 1.5 percent in 2014 and was at 1.7 percent this year.
Inflation has been so low that the government isn’t expected to add to the benefits of 60 million retirees, disabled workers, spouses and children, receiving Social Security benefits. Also caught in that uncomfortable income freeze are about 4 million disabled veterans, 2.5 million federal retirees and more than 8 million people receiving Supplemental Security Income checks, The Associated Press reports.
Since Congress in 1975 enacted automatic increases for Social Security, recipients have received an average of 4 percent annually. According to the Social Security Administration, $863 billion in 2014 was paid to about 60 million Americans in Social Security benefits. The average monthly Social Security check is $1,224.
Few people have savings that can carry them through retirement, and interest earnings are pathetically low. That’s caused more people to rely on Social Security and pensions. Social Security benefits represent about 38 percent of the income for older Americans.
The COLA is determined by comparing consumer prices in July, August and September of each year with prices in the same three months a year ago. Consumer prices for July and August fell compared with last year. In addition, gasoline prices were down by 23 percent from a year ago.
That doesn’t work in favor of fixed government income beneficiaries who know that costs for health care, housing and other expenses have been chewing bigger chunks from their checks.