Brace yourself. From now until November, I promise you that you will hear about this next piece of news over and over again: There will likely be no increase in Social Security benefits (sometimes referred to as a “COLA” or “cost of living adjustment”) for 2011. That makes two years in a row since there wasn’t an increase in 2010 (though there was an above average increase – nearly 6% – in 2009).
Despite the spin that I’m sure will be heaped upon this stat, here’s the real reason: there’s not enough inflation in the consumer price index (CPI). In theory, that should be a good thing, right? Inflation is low? But that’s not going to be enough to stave off the inevitable “(Fill-in-the-blank here) hates seniors” comments that will likely fill the airwaves shortly.
This isn’t an official announcement. The Social Security Administration still has to make the call. But they will. The numbers don’t support the bump for 2011. The numbers for 2012 look to represent an increase of about .4% or $5 per month.
But it *is* an election year and seniors vote, so you can’t expect Congress to sit back and do nothing. The Dems have introduced a bill to mail one-time checks to seniors to buy votes make up for it. The proposed $250 checks (which represents about four times more than the bump will get seniors in 2012) would come at a cost of $14 billion.
There is a silver lining for those taxpayers who are still working: no increase in inflation also means no step up in the amount of wages subject to Social Security tax. Those wages should stay put at $106,800.
I fully understand why this happens. It’s just the way it works when using COLA index. I certainly appreciated getting a little increase each year until now. When you use cost of living index you don’t always get that increase. Maybe we should get the same automatic increases congress or federal employees get?