No Social Security Pay Increase for Second Straight Year

No rise in Consumer Price Index, therefore, no raise

Senior citizens will not welcome 2011 joyfully. For the second year in a row their Social Security checks will not see a cost of living increase, despite some increases in prices of things like food, fuel and medical care.

Social Security increases depend on a rise in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The way the CPI is calculated by the Bureau of Labor Statistics, there has been no increase in the CPI-W for the second straight year. “[T]herefore,” says the Social Security Administration, “under existing law, there can be no COLA in 2011.”

As reported previously on AdvisorOne.com, the rise in prices in some areas of the CPI have been offset by drops in other areas. This makes it difficult on seniors who often must devote far more of their income to the areas that rise than to those that fall. The absence of a COLA for the second year in a row is so unpopular that President Barack Obama and the Democrats are pushing for a one-time $250 stimulus payment for seniors on Social Security. Obama had advocated such a payment in the fall of 2009, but Republicans and a dozen Democrats blocked the measure. House Speaker Nancy Pelosi is promising to schedule a vote after the November 2 elections.

Other changes that are triggered by a rise in the CPI will not occur, such as a change in the maximum amount of earnings subject to the Social Security tax and the retirement earnings test exempt amounts. More information on the COLA is available at the SSA website, as is more information on Social Security and Supplemental Security Income changes for 2011.

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