Social Security Increase
October 20, 2011 by staff
Social Security Increase, For the first time since 2009, retired Americans will receive an increase in Social Security benefits. But even before it appears on your benefit check in January could be devoured by an increase in Medicare premiums.
The cost of living adjustment, or COLA, will be an increase of 3.6%. Affecting about 55 million Social Security beneficiaries and another 8 million Americans who receive Supplemental Security Income (SSI).
Compared with previous increases, it is quite moderate, says Polina Vlasenko, a researcher at the American Institute for Economic Research. The latest cost of living adjustment in January 2009 was an unusually large 5.8%. In the early increases were 2.3% to 4.1%.
The increase may lose some of its luster. Retirees can not see a lot, or none at all, because the increase in Medicare premiums may also increase, said Paul Gada, personal finance manager for Allsup Medicare Advisor, a provider of Social Security and Medicare consultation.
For those who are enrolled in Medicare, your premiums are automatically deducted from Social Security checks. However, Medicare can not reduce Social Security checks from one year to another.
“So in the last two years, when there was no increase COLA, Medicare deductions could not increase,” says Vlasenko. “This provision has never been used until the last two years because there was always a COLA increase before that date.”
Medicare premiums are expected to be determined by Medicare next month.
“The COLA increase is good news, but not completely do the trick,” says Merton Bernstein, professor emeritus at Washington University in St. Louis School of Law. “No deal with the most out of pocket costs for seniors and persons with disabilities.”
The annual cost of living is tied to an inflation measure released Wednesday. The measure, which was adopted in the 1970s produced no COLA in 2010 or 2011 because inflation was very low. These were the first two years without a COLA since automatic increases were enacted in 1975.
On average, Social Security beneficiaries receive and 1,082 per month, or about 13,000 a year. The increase will add about 39 and a month, or 468 a year.
“Social Security is the most important source of income by far, for most retirees, and a large percentage is the only income they have,” says David Certner, legislative policy director of AARP. “But getting this increase does not mean you’re getting ahead. Just not allowed to stay behind.”
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