It’s official, there will be no cost of living adjustment (COLA) for 57 million Social Security recipients in 2010. I wrote about how this subject back in August when the trustees that oversee Social Security made the projection.
Last year, driven by a spike in energy prices, Social Security recipients received a 5.8% COLA. Not this year. Social Security COLA rates are tied to the rate of inflation, which is measured by the consumer price index (CPI). EnergyÂ prices have dropped since last year, which adjusted the CPI downward, meaning no COLA.
This is a problem for older adults, because:
- many live on a fixed income;
- they spend a lot of money on health care, where prices far outpace inflation;
- anyone living in the real world knows living expenses have only gone up!
In lieu of a COLA, President Obama is urging a $250 “emergency payment.”
This is not a new idea. Social Security recipients received a one-time $250 payment in February as part of the government’s economic stimulus package. The average Social Security payment for all recipients is $1,094 a month. The White House estimates that this $250 payment will cost about $13 billion over 10 years. The cost will likely add to the national debt.
Is the $250 payment a smart idea or no?