In our last post we discussed the fact that many Social Security Disability recipients will see 3.6 percent increase in benefits starting in January. This means that the 55 million Social Security recipients across the country will on average receive monthly benefit increases around $39 or $467 a year. Participants in the Supplemental Security Income program will see increases of $18 per month.
The increases are due to the recent cost-of-living adjustment. The so-called COLA is made every year and correlates to the amount of inflation in the economy. No COLA increase was given this year or last year because inflation rates were so low. Some recipients did however receive a stimulus payment of $250 in 2009, but this one-time payment is not expected to be reinstated for future years.
Many see the 3.6 percent increase as a way of bolstering consumer spending and helping those who have to live on fixed incomes. Some economists believe that the COLA increase will only have small impacts on the greater economy however.
“The COLA will help the economy a bit,” David Wyss, former chief economist at Standard & Poor’s said. “At least, it is moving in the right direction. But it is not a game-changer.”
The reason for the two-year freeze in COLA increases is because the spike in energy prices in 2008 caused a massive 5.8 percent COLA increase in 2009. This was the largest increase in 27 years and it took two years of no increases to adjust for the dive that energy prices took when the housing market collapsed around the end of 2008.
Source: Associated Press, “Social Security benefits to go up 3.6 percent,” Stephen Ohlemacher, Oct. 19, 2011