Low inflation means no Social Security COLA in 2011

Low inflation and recession have brought on Social Security to abandon a cost of living adjustment (COLA) for the second time since COLAs were instituted by Congress back in 1975. According to the Associated Press, 2010 was the first year without a COLA for Social Security, and 2011 could be the second. The Social Security Administration blames the lack of a COLA on inflation rates being too low.

Less Social Security COLA is what Congress is working on

More than 58 million American retirees and disabled people depend on Social Security, and all of them anticipate the annual COLA. Each Social Security recipient would get $250 with the bill the House of Representatives can be voting on in Nov as this is the second year that there hasn’t been a raise in benefits. 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. This bill would make more individuals unhappy with the retired Americans in the country. They’re a heave burden on America. Home values and savings continue to stay really low. Also, the economic recession has brought on the cost of living to go up although COLAs have stayed the same.

83 years old retiree Betty Dizik told the AP, “We’re just a little bit upset because our bills are going up and our Social Security is not,” evidently. The $1,200 a month Social Security check coming in for Dizik is her only source of income. She is not in any kind of special situation. $1,072 a month is the average amount a Social Security check brings in. The Social Security Administration also indicates that 64 percent of those who received Social Security compensation in 2008 depended upon it as their sole income.

Huge Social Security COLA in the prior

Social Security is at the moment supported by a 6.2 percent payroll tax paid by workers and employers. $106,800 is the maximum wage cap where the tax is nevertheless being applied. With the last Social Security COLA in January 2009, payments went up 5.8 percent, the largest increase in 27 years, reports the AP. An boost in energy prices led to that abnormally large COLA.

Consumer prices have to rise above 2008 levels before a COLA can occur for Social Security. The Social Security Administration has already planned for this. It plans on a 1.2 percent COLA in 2011 that would not start until 2012 in January.

Information from

Associated Press

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