Social Security Checks 3.6 Percent Increase Announced - Millions to Benefit
Social Security Checks Will Increase Beginning January 2012
The government announced Wednesday that social security patrons, who constitute roughly 60 million Americans, will receive a 3.6 percent increase in their 2012 social security checks, the first increase since 2009.
“Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 60 million Americans will increase 3.6 percent in 2012,” read the government issued statement Wednesday.
This is compared to the 5.8 percent increase beneficiaries received in 2009.
The news isn’t all good however; the increase in checks is a result of an increased inflation rate. According to Bloomberg Business Week, wholesale prices have increased 0.8 percent in the U.S., which is higher than expected.
Inflation has been too low in the past two years to allow for an increase in checks. The raise will ring in the 2012 New Year, beginning in January.
The increase in social security check amount is determined by the COLA, or the Cost-of-Living adjustment (COLA). The COLA was implemented in 1975 to reward social security users with small increases every year. 2010 and 2011 are the only two years the checks have not increased.
“After two years with no COLA and increasing costs for food, utilities and health care, every dollar of the modest average benefit of $14,000 is critical,” Tiffany Lundquist, spokeswoman for senior advocacy group AARP, said in a statement.
According to CNN, although the check increase is promising for beneficiaries, many will not receive the full amount.
“[…] most seniors are not likely to receive the full amount of the COLA increase because the expected hike in Medicare premiums could eat up part of the raise,” contended CNN.
According to the American Institute for Economic Research, lack of increase in the past two years is due to lower inflation rates. The COLA can never become negative, which is exactly what it did in 2010 and 2011. In January 2010, the COLA sat at zero.
“The COLA is triggered only if the index surpasses the value it had the last time the COLA was positive,” according to the AIER website.
The COLA for a social security individual is calculated based on the “primary insurance amount,” which is related to the beneficiary’s income. All of this is compiled to calculate the COLA determined for the individual.
With holidays right around the corner, the inflation rise come at an inopportune time for gift shoppers.
England is also suffering; the country saw a record breaking rise in inflation today at 5.2 percent.
Critics predict that a high increase in inflation could wipe Obama’s chances of winning the re-election in 2012.
