Lower gas prices means no Social Security increase next year
Business
Lower gas prices means no Social Security increase next year
For just the third time in 40 years, millions of Social Security recipients, disabled veterans and federal retirees can expect no increase in benefits next year, unwelcome news for more than one-fifth of the nation’s population. They can blame low gas prices. By law, the annual cost-of-living adjustment, or COLA, is based on a government measure of inflation, which is being dragged down by lower prices at the pump. Inflation has been so low this year that economists say there is little chance the September numbers will produce a benefit increase for next year. Only twice before, in 2010 and 2011, have there been no increases.
My husband is working just so we can pay our bills. He’s 70 years old, and he’s still working in a stone quarry. He’s told me a number of times that he thinks he’s going to have to work until the day he dies.
Carol Mead of Montrose, Pennsylvania, said she and her husband were counting on Social Security COLA to help them with their finances.
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. Since then, increases have averaged 4 percent a year.The lack of a COLA means that older people could face higher health care costs.The COLA is calculated by comparing consumer prices in July, August and September each year with prices in the same three months from the previous year. If prices go up, benefits go up. If prices drop or stay flat, benefits stay the same.Advocates argue that the government’s measure of inflation doesn’t accurately reflect price increases in the goods and services that older Americans use. In all, the COLA affects payments to more than 70 million Americans.
The COLA is determined by the buying power of younger working adults.
Mary Johnson of The Senior Citizens League.
