WASHINGTON — For the third straight year, millions of Social Security recipients, disabled veterans and federal retirees can expect historically small increases in their benefits come January.
WASHINGTON — For the third straight year, millions of Social Security recipients, disabled veterans and federal retirees can expect historically small increases in their benefits come January.
Preliminary figures suggest the annual cost-of-living adjustment, or COLA, will be less than 2 percent. That translates to a raise of about $20 a month for the typical Social Security beneficiary.
The government is scheduled to announce the COLA on Wednesday, when it releases the latest measure of consumer prices. By law, the COLA is based on inflation, which is well below historical averages so far this year.
For example, gas prices are down from a year ago, and so is the cost of clothing. Prices for meat, fish and eggs are up nearly 9 percent, but overall food costs are up less than 3 percent, according to the government’s inflation report for August.
Medical costs, which disproportionately affect older people, are only 1.8 percent higher.
But good news at the pump means bad news for benefit increases. Many older people who rely on Social Security are feeling the pinch of tiny benefit increases year after year.
“You lose that increase, not only in the short-term, you lose the compounding over time,” said Mary Johnson of The Senior Citizens League. “For the middle class, for people that don’t qualify for low-income programs, they are dipping into savings or they are borrowing against their homes.”
The Senior Citizens League projects the COLA will be 1.7 percent, which is in line with other estimates. Economist Polina Vlasenko, a research fellow at the American Institute for Economic Research, projects the COLA will be between 1.6 percent and 1.8 percent.
Congress enacted automatic increases for Social Security beneficiaries in 1975, when inflation was high and there was a lot of pressure to regularly raise benefits.
For the first 35 years, the COLA was less than 2 percent only three times. If the COLA is less than 2 percent next year, it would be the fifth time in six years. This year’s increase was 1.5 percent, the year before it was 1.7 percent.
Susan Gross gets hit twice by the small COLA. She cares for both her disabled son and her 89-year-old mother, both of whom get Social Security benefits.
A 1.7 percent increase comes to $12.60 a month for her son, said Gross, who lives in rural Barboursville, Virginia.
“That won’t even pay for his prescription program,” she said.
Gross, who works in an accounting office, said her family makes due by growing and canning much of their own food, which they can do because they live in the country.
“It makes our grocery bills less,” she said.
More than 70 million people receive benefits affected by the annual COLA.
About 59 million retirees, disabled workers, spouses and children get Social Security benefits. The average monthly payment is $1,191. A 1.7 percent raise would increase the typical monthly payment by about $20.
The COLA also affects benefits for about 4 million disabled veterans, 2.5 million federal retirees and their survivors, and more than 8 million people who get Supplemental Security Income, the disability program for the poor.