Social Security cost of living adjustment to be smallest ever
Each year, Social Security benefits of all types are adjusted for changes in the cost of living. On average, benefits rise by 4.1 percent each year to keep up with rising costs of gas, food, and other items. This year, however, recipients of Social Security benefits, including New York residents receiving disability benefits, should expect a much smaller increase.
According to multiple sources — including the Associated Press, the American Institute for Economic Research, and AARP –, the 20 percent of Americans who rely on Social Security benefits should expect an approximate increase of just 1.5 percent in January. A 1.5 percent increase in benefits would make next year’s cost of living adjustment the smallest ever.
The reason behind the meager rise in benefits is that average prices for consumer goods like food, medical care, and clothing, rose by just 1.4 percent over the last year. Some argue, however, that cost of living adjustments should be based more heavily on certain items that are more likely to affect recipients.
For example, while gas prices dropped from last year and food costs only rose slightly, medical expenses increased by 2.5 percent. Many people receiving Social Security retirement or disability benefits spend much of their money on health care. The extra $17 a month that the average recipient will get might not go far enough to cover the most important costs.
For right now, the 1.5 percent cost of living adjustment is just an estimate. Historically, beneficiaries are told what the actual adjustment will be in October, but the federal government shutdown may delay that announcement.
Source: Huffington Post, “Social Security Increases Are Historically Small This Year,” Oct. 13, 2013