No increase projected in Social Security payments

[October 12, 2010]  WASHINGTON (AP) -- As if voters don't have enough to be angry about this election year, the government is expected to announce this week that more than 58 million Social Security recipients will go through another year without an increase in their monthly benefits.

It would mark only the second year without an increase since automatic adjustments were adopted in 1975. The first year was this year.

The cost-of-living adjustments, or COLAs, are automatically set each year by an inflation measure that was adopted by Congress back in the 1970s. Based on inflation so far this year, the trustees who oversee Social Security project there will be no COLA for 2011.

The projection will be made official Friday, when the Bureau of Labor Statistics releases inflation estimates for September.

This past Friday, the same bureau delivered another painful blow: The U.S. lost 95,000 jobs in September and unemployment remained stubbornly stuck at 9.6 percent.

This week's announcement about Social Security benefits raises more immediate concerns for older Americans whose savings and home values still haven't recovered from the financial collapse: Many haven't had a raise since January 2009, and they won't get one until at least January 2012.

"While people aren't getting COLAs, they certainly feel like they're falling further and further behind, particularly in this economy," said David Certner, AARP's legislative policy director. "People are very reliant on Social Security as a major portion of their income and, quite frankly, they have counted on the COLA over the years."

Social Security was the primary source of income for 64 percent of retirees who got benefits in 2008, according to the Social Security Administration. A third relied on Social Security for at least 90 percent of their income.

Federal law requires the Social Security Administration to base annual payment increases on the Consumer Price Index for Urban Wage Earners and Clerical Workers, which measures inflation.

Officials compare inflation in the third quarter of each year -- the months of July, August and September -- with the same months in the previous year.

If inflation increases from year to year, Social Security recipients automatically get higher payments, starting in January. If inflation is negative, the payments stay unchanged.

[Associated Press; By STEPHEN OHLEMACHER]

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