Since 1975 when Congress instituted the cost of living adjustment (COLA) for Social Security payments, only once has there failed to be an increase. That had been this year. And as the Associated Press accounts, 2011 will be one more non-COLA year for Social Security. The reason for this, reports the Social Security Administration, is that inflation is too low.

The legislature working to make up for lack of Social Security COLA

Each and every year, those retired and disabled Americans on Social Security hope to get their annual COLA. There are more than 58 million that want this. Each Social Security recipient would get $250 with the bill that the House of Representatives could be voting on in November as this is the second year that there hasn’t been a raise in benefits. The AP explains the Senate is pretty opposed to the bill although House Speaker Nancy Pelosi hopes to get the bill through the House really easily. Such news will no doubt add to the already heavy burden many retired Americans carry. Home values and savings continue to stay really reduced. Also, the economic recession has caused the cost of living to go up although COLAs have stayed the same.

83 years old retiree Betty Dizik told the AP, "We’re a little bit upset because our bills are going up and our Social Security isn’t," apparently. The $1,200 a month Social Security check coming in for Dizik is her only source of income. And her situation is far from unique. The average Social Security check is $1,072 per month. Based on the Social Security Administration, Social Security checks are the only source of income for 64 percent of those receiving it. This is what was reported in 2008.

Social Security COLA last time was large

Social Security is currently supported by a 6.2 percent payroll tax paid by workers and employers. The tax still applied to a maximum wage cap. This cap is at $106,800 right now. The AP explains that January 2009 was the last Social Security COLA which had the largest increase in 27 years with a 5.8 percent boost. An increase in energy prices led to that abnormally large COLA.

By law, a Social Security COLA will not occur again until consumer prices rise above 2008 amounts. Social Security Administration anticipates that this will occur in 2011, leading to a 1.2 percent COLA that will hit in January 2012.

Citations

Associated Press

msnbc.msn.com/id/39684354/ns/business-eye_on_the_economy/