Small 2013 Social Security benefit increase likely
WASHINGTON - Social Security recipients won't be getting big benefit increases next year, but the small raises they will receive are playing an important role in helping seniors grow their incomes even as younger workers lose ground.
Preliminary figures show the annual benefit boost will be between 1 and 2 percent, which would be among the lowest since automatic adjustments were adopted in 1975. Monthly benefits for retired workers average $1,237, meaning the typical retiree can expect a raise of between $12 and $24 a month.
The size of the cost-of-living adjustment, or COLA, will be made official Tuesday, when the government releases inflation figures for September.
"The COLA continues to be very critical to people in keeping them from falling behind," said David Certner, AARP's legislative policy director.
How important is the COLA? From 2001 to 2011, household incomes in the U.S. dropped for every age group except one: those 65 and older.
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The median income for all U.S. households fell by 6.6 percent, when inflation was taken into account, according to census data. But the median income for households headed by someone 65 or older rose by 13 percent.
"That's all because of Social Security," Certner said. "Social Security has the COLA and that's what's keeping seniors above water, as opposed to everybody else who's struggling in this economy."
Seniors still, on average, have lower incomes than younger adults. Most older Americans rely on Social Security for a majority of their income, according to the Social Security Administration.
"It's useful to bear in mind that no other group in the economy gets an automatic cost-of-living increase in their income," said David Blau, an economist at The Ohio State University. "Seniors are the only group."
The small COLA is unlikely to please a big bloc of voters - 56 million people get benefits - just three weeks before elections for president and Congress. However, it's tied to a government measure of inflation adopted by Congress in the 1970s. It shows that consumer prices have gone up by less than 2 percent in the past year.
"Basically, for the past 12 months, prices did not go up as rapidly as they did the year before," said Polina Vlasenko, an economist at the American Institute for Economic Research, based in Great Barrington, Mass.
This year, Social Security recipients received a 3.6 percent increase in benefits after getting no increase the previous two years.
Some of next year's raise could be wiped out by higher Medicare premiums, which are deducted from Social Security payments. The Medicare Part B premium, which covers doctor visits, is expected to rise by about $7 per month for 2013, according to government projections.
The premium is currently $99.90 a month for most seniors. Medicare is expected to announce the premium for 2013 in the coming weeks.
Many seniors feel like the COLA doesn't cover their rising costs.
"You have utilities go up, your food costs go up. Think about how much groceries have gone up," said Janice Durflinger, a 76-year-old widow in Lincoln, Neb. "I would love to know how they figure that."
The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a broad measure of consumer prices generated by the Bureau of Labor Statistics. It measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education.
In the past year, food prices have risen 2 percent while home energy prices have dropped 3.8 percent, according to the CPI-W. Housing costs have gone up 1.4 percent and gasoline prices have increased by 1.8 percent.
Blau said it's common for seniors to feel like the COLA doesn't reflect their rising costs, in part because older people tend to spend more of their income on health care. Medical costs have risen 4.3 percent in the past year as measured by the CPI-W.
"Inflation affects everybody differently unless you happen to be that mythical average person who buys the average bundle of goods," Blau said.
By law, the Social Security Administration compares the price index for July, August and September with consumer prices in the same three months from the last year in which a COLA was awarded. A COLA was awarded a year ago, so the index from July, August and September of this year is being compared with the index from the same period in 2011.
If prices go up over the course of the year, benefits go up, starting with payments delivered in January. But if prices go down, benefits stay the same. That's what happened in 2010 and 2011, when there was no COLA.
This year, consumer prices for July and August indicate next year's COLA would be 1.4 percent. The price index for September - the final piece of the puzzle -will be released Tuesday. Several economists said they don't expect it to change the projected COLA by more than a few tenths of a percentage point, if at all.
Vlasenko estimates the COLA will be from 1.5 to 1.7 percent. AARP estimates it will be about 1.5 percent.
Since 1975, the annual COLA has averaged 4.2 percent. Only five times has it been below 2 percent, including the two times it was zero. Before 1975, it took an act of Congress to increase Social Security payments.
"Over the past year, consumer prices have only gone up a little bit," Blau said. "By historical standards, it's a very low rate of increase."
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"That's all because of Social Security," Certner said. "Social Security has the COLA and that's what's keeping seniors above water, as opposed to everybody else who's struggling in this economy."
this comment is 'ASS'Inine!! "AS opposed to EVERYone else"??? don't 'they, the powers that be', realize that MOST/SOME SS & SSDI recipients RECEIVE just enough of their OWN PAID IN SOCIAL SECURITY benefits to pay, say, the mortgage/rent & maybe another bill or 2? I am so sick of hearing people ***** about Social Security recipients that I could PUKE!!! Now if they'd get their heads out of their proverbial rear ends, they would see that the program IS paid by us, who contributed through our weekly/bi weekly or monthly WORK PAY, when we were W O R K I N G? Now I see 1 problem- with the 'SSI' (supplemental security income) program & some of the folks that were deemed disabled, yet may have not worked enough quarters or--AT ALL. This is usually based on disability at the time of application. About 20 yrs ago, the Gov't smartened up a tad, by DISallowing qualifying people that were disabled only through alcoholism, and a LOT of folk had to stop drinking, jump hoops & try to re-apply~which obviously gave the Social Security program a little extra$ there right? & I could slap the faces of the PEOPLE that WE voted into office, that are the 1's that are griping about SS& SSDI ppl as being that 47% of what Romney secretly spoke about & was recorded saying in 1 of his highly paid but supposedly secret benefit for his campaign. That we are in the mindset that we deserve this $, GOD forbid!!! I think they could re-vamp the SSI program & qualifications, for 1 (I truly have a couple of disabled grandchildren & that is all the income that their tiny little selves can have once they are old enough, unless a miracle strikes & the family wins the lotto, lol, fat chance!), the retro payments, that may help.... ALso I hope that people take into mind that --HELLO?--how many SS/SSDI (&SSI) ppl that have passed away, moved or married & or no longer need/use these $'s?!?!?!?! You don't hear ANY1 speak of these folks, am I right?? I know that I may take words & twist them into my liking, but when those powers that be do so, all I can ask is: have you ever been there, done that? walk a mile in 'our' shoes!! thanks for allowing me to spew!
What this is is congress f ing the american poor people so they can pay for their war and all the money we keep giving to other countries so they can get some influence in those countries and for bailing out banks and auto industries.saving the rich and screwing over the poor..
Gas keep's going up food,cable,phone cost more,**** every thing cost more and these A holes keep feeding this line of crap and as long as these people keep voting those people in to office ,then they have no body to blame but them self's..send these cockroaches a message and vote them out,or shut up..
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Don't get down on the elderly and disabled by putting out misleading stories like this.. I for one would rather be working making 70K a year.. than laying around her hurting and eating mac and cheese...
Of course they voted themselves a nice fat raise. They did the same thing when I was in the Army. During Desert Storm while I was fighting for my life they thought that we didn't need the increased income and at the same time almost doubled their salaries.
My brother Mark died last month because he couldn't afford the heart medication he needed to survive. He never told the family, we found out when he ended up in the hospital right before he passed. This is outrageous he worked as an electrician all over the United States form the time he was 17 years old. He would have been 53 on the 8th of October.
If not for the VA I would have been gone several years ago as well so at least I have my medical issues taken care of.
The cost of food is through the roof already and next year it is supposed to be worse still. The droughts we have suffered in the farmlands of the United States this year are the worse in recorded history with huge losses which will be paid for by us in the markets.
What will it take to get Congress and the Senate to get their acts together?! We need to flush the toilet and start from scratch with new representatives.
The new Congressmen come into government with high hopes for doing what is best for the people of the United States only to be corrupted by the fat cats who have been sucking the marrow out of all Americans for far too long. Power and Money are addictive and cause corruption. We need to start with a clean slate.
Maybe it is getting to be time for America to develop its own extremists to deal with these guys once and for all. If only I was physically or financially able to do something along those lines. After all I was trained by the best to deal with tyrants.
Why don't the Dems tell the truth......they DON"T WANT to give a fair cost of living increase to seniors!
Not to mention.....they will raise the Medicare deductible......AGAIN! The net.....will be only 50% of the cost of living increase! That won't even pay for a lunch out, once a month!