Social Security users will enjoy no COLA

Since Congress established the annual cost of living adjustment (COLA) for Social Security payments in 1975, only twice have Social Security payments actually failed to rise. Now the Associated Press suggests that there will be no Social Security COLA in 2011. The reason for this, reports the Social Security Administration, is that rising cost of living is too low.

Less Social Security COLA is what The legislature is operating on

The annual COLA that is designed to come to those retired and disabled on Social Security is what 58 million Americans in these programs want every year. In reaction to what could be the second straight year without a raise in benefits across the board, the House of Representatives plans a Nov vote on a bill that would give each Social Security recipient $250. The AP explains that the Senate is pretty opposed to the bill although House Speaker Nancy Pelosi hopes to get the bill via the House really quickly. Such news will no doubt add to the already heavy burden numerous retired Americans carry. Home values and savings continue to stay really low. Also, the recession has caused the cost of living to go up although COLAs have stayed the same.

Based on retiree Betty Dizik who is 83, “We’re a little bit upset because our bills are going up and our Social Security isn’t.” This is what the AP reports. Dizik’s only source of income is a $1,200 month Social Security check. And her situation is far from unique. Social Security checks are about that size. In fact, $1,072 is the average each month. Based on the Social Security Administration, Social Security checks are the only source of income for 64 percent of those receiving it. This is what was reported in 2008.

The past Social Security COLA had been a large one

Workers and employees pay a 6.2 percent payroll tax right now for Social Security. $106,800 is the maximum wage cap where the tax is nevertheless being applied. The AP explains that January 2009 had been the last Social Security COLA which had the largest boost in 27 years with a 5.8 percent increase. An increase in energy prices led to that abnormally large COLA.

The law has made it so the COLA can’t rise again for a while. Consumer prices have to go above 2008 amounts before that could happen. Social Security Administration anticipates that this will occur in 2011, leading to a 1.2 percent COLA that will hit in January 2012.

Data from

Associated Press

msnbc.msn.com/id/39684354/ns/business-eye_on_the_economy/