After going more than three years without a sorely needed cost of living adjustment, Social Security beneficiaries are expected to receive an increase in benefits next year. Currently, that increase is predicted to be less than one percent, but if gas prices and other costs remain high, beneficiaries may see as much as a two percent increase in their benefit amounts.
Recipients of Social Security, Social Security Disability, and similar programs, have not received a cost of living increase since 2008. During the third quarter of that year, the government awarded an increase of 5.8 percent, which is the highest such increase on record since 1982. Because the 2008 jump was so high, it has taken this many years for inflation to surpass that level set in the third quarter of 2008.
But now, as gas prices have once again gone up, simultaneously raising the cost of food and other necessities, that inflation level has crept up past the mark set in 2008. The Social Security Administration has projected the cost of living adjustment based on inflation assumptions from last December. At that time, the increase was expected to be around 0.7 percent.
But the actual cost of living adjustment will be based on a comparison of the inflation rate during the months of July, August and September to that during the third quarter of 2008. Because gas prices have, of course, increased significantly since December, analysts are predicting that the cost of living increase could be as high as two percent.
Source: The Baltimore Sun, “Social Security: After two-year drought, beneficiaries expected to get a raise,” Eileen Ambrose, 31 May 2011