The Social Security Administration announced today (October 16, 2012) that both Social Security retirement and disability recipients would receive a 1.7 percent Cost of Living Adjustment (COLA) for 2013.
This is welcome news to the nearly 62 million Americans who receive Social Security payments. Unfortunately the amount of increase is not what these recipients had in mind.
The increase is less than half the increase for 2012, which was 3.6 percent. This increased the average monthly benefit for those on Social Security Disability Insurance (SSDI) to $1,111 per month and SSI monthly payments increased from $674 in 2011 to $698 in 2012. There was no increase of payments to Social Security recipients from 2009-2011. The 1.7 percent increase equates to an extra $11.87 per month for SSI recipients and an extra $18.89 per month for the average SSDI recipient.
The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, a measure of consumer prices generated by the Bureau of Labor Statistics. Things that are considered are prices for food, housing, clothing, transportation, energy and medical care.
Although COLA may be a good way to measure cost of living for the general public it may not be the best way to measure cost of living for seniors and those who are collecting SSDI or SSI. Seniors and those receiving Social Security disability tend to spend more of their income on healthcare premiums for Medicare and private insurance. By this standard the COLA increase for Social Security in 2013 does not measure up to the 4.3 percent increase in medical costs as measured by COLA.
Since 1975, when automatic increases were instituted, the COLA increase has been below 2 percent just five times.
For more information about the history of the COLA increase and what is measured visit: http://www.cbsnews.com/8301-505123_162-57532240/small-2013-social-security-benefit-increase-likely/
