BRADENTON – The government announced Wednesday that Social Security benefits will rise only 1.5 percent next year, as a result of their transition to chained CPI to measure inflation. The increase will be among the smallest since automatic adjustments were adopted in 1975. The cost-of-living adjustment, or COLA, is based on a method that allows for substitutions in comparable goods when prices rise. The move was met with public outcry from senior groups and some lawmakers in senior-laden districts.
The size of the increase was low as a result of consumer prices, at least as measured by the government, haven't risen much in the past year. The COLA affects benefits for more than 20 percent of the country, from disabled veterans and federal retirees to people who get Supplemental Security Income (SSI), the federal disability program.
Social Security benefits for the average retired worker are $1,272 a month. A 1.5 percent increase would amount to about $19. Since 1975, annual Social Security raises have averaged 4.1 percent and have been less than 2 percent only six times -- including three of the last five years. This year's increase was 1.7 percent. There was no COLA in 2010 or 2011 because of low inflation rates.
“Seniors know all to well, their living costs often outpace the COLA increase and a 1.5% increase is anything but too generous," said Max Richtman, President/CEO of NCPSSM, a nonprofit, nonpartisan interest group. "Given that the average senior currently receives just over $14,000 a year in Social Security, it’s hard to imagine how anyone can argue the COLA should be cut."
The change in formula is predicted to save the federal government $130 billion over the next decade.
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