Social Security and Medicare will risePublished 2:06pm Thursday, November 3, 2011
By WAYNE CURTIS / Guest Columnist
For the past two years, 55 million Social Security recipients have not received any increase in benefits. But this is about to change.
This news comes at an opportune time since most seniors have not fully recovered from the financial collapse. Both their savings accounts and home values declined drastically. And neither has returned to pre-recession levels with little hope of this occurring in the near future.
Recipients are going to receive a cost-of-living adjustment (COLA) in 2012. COLAs are automatically set by a formula enacted by Congress that requires the Social Security Administration to determine annual payments based on the Consumer Price Index (CPI).
Changes in the CPI for the months of July, August and September are compared with the same period in the previous year. Social Security recipients receive increases that match the change in the CPI, beginning with the checks for January. Based on the changes in the CPI, the increase is will be 3.6 percent
The last adjustment, 5.8 percent, occurred in 2009. This represented the change in the CPI from the third quarter of 2007 to the same quarter of 2008.
According to studies conducted by the Social Security Administration, Social Security payments are the primary source of income for 64 percent of recipients. And, importantly, one-third of them report that Social Security accounts for 90 percent of their income. The average benefit is $1,082 per month.
It should be noted that recipients will not receive the entire 3.6 percent increase. For most recipients, this will be partially offset by a $3.50 monthly rise in Medicare Part B premiums that are deducted automatically from Social Security benefits.
Because of the Medicare increase, the additional benefits for the average recipient making $1,082 per month will decrease from $39 to about $35.50 per month.
Nevertheless, the increase bodes well for retirees who are dependent upon Social Security for their monthly living expenses.
Wayne Curtis, Ph.D., is on the board of directors of First United Security Bank. He may be contacted at firstname.lastname@example.org.