Living on a fixed income can be more than just a challenge when the cost of rent, food and energy climb year after year. That is why government programs like Social Security Disability and Social Security retirement have cost-of-living adjustments, but over the last two years beneficiaries may have found it harder to get by because there has not been a cost-of-living adjustment (COLA). Fortunately, people in Cincinnati, Ohio and elsewhere will see their Social Security benefits increase in 2012 because of a COLA approved for the year.
Next year Social Security benefits and Social Security Disability benefits will increase by 3.6 percent. One in five Americans receive government retirement and disability benefits, and it is the first increase since 2009 that beneficiaries will see. That means that over 60 million Americans will see a small relief after enduring the loss of home value, increase in medical costs and a drop in retirement account value.
In January more than 8 million people who receive Social Security Disability will get an extra $216 per year or $18 per month, and around 55 million people who receive Social Security retirement will see an increase of $467 per year or $39 per month. While the amount may sound quite small, the CEO of the National Committee to Preserve Social Security and Medicare said the COLA adjustment lets many beneficiaries know "some relief [is] around the corner."
The annual cost-of-living adjustment is tied to a measurement of inflation and the measure of inflation has been used since the 1970s. The measurement did not produce a COLA increase in 2010 or 2011 because inflation was too low. The two years were the first time there was no annual cost-of-living adjustment.
Source: Bloomberg Businessweek, "Social Security benefits to go up 3.6 percent," Stephen Ohlemacher, Oct. 19, 2011