Social Security recipients’ benefits hiked

About 55 million seniors are getting a 3.6 percent cost-of-living adjustment (COLA) that starts in January, while another 8 million who receive supplemental security income will see increased payments beginning Dec. 30, the Social Security Administration announced Wednesday.

Senate Finance Committee Chairman Max Baucus (D-Mont.) called the increase “welcome news for seniors facing high prices for everyday items like gas, food and medicine.”

“This boost in benefits helps seniors make ends meet, and it shows that Social Security works to respond to their needs,” he said. “Our focus moving forward needs to be keeping Social Security strong for today’s seniors and for generations to come.”

{mosads}The increase will grow the average benefit by $516 to $14,748 each year, according to the Senate Finance Committee.

The hike in benefits comes as news in a separate government report shows prices eclipsing those of the third quarter in 2008.

The Consumer Price Index — a measure of inflation — was up 0.3 percent in September, slightly below the 0.4 percent increase in August, the Labor Department reported.

Excluding food and energy — an area where consumers have seen the largest price increase in recent months — so-called core prices increased 0.1 percent, the smallest increase since March but enough of a bump to push prices above those 2008 levels.

There weren’t any COLA increases in 2010 and 2011 because inflation didn’t increase enough to warrant a change, the first time without increases since automatic yearly increases began in 1975.

The 2009 economic stimulus did provide a one-time payment of $250 for those in the program.

Advocates expressed support for the move but said prices for food utilities and healthcare have continued to increase while Social Security benefits have gone unchanged.

“Unfortunately, the increase announced today will not completely ease their burden,” said Nancy LeaMond, executive vice president with AARP.

“Medicare premiums are also expected to rise for many. And with the decline in housing values, deep losses to retirement and savings accounts and skyrocketing health and prescription drug costs, millions of older Americans continue to struggle to make ends meet.”

Medicare premiums are expected to increase in January.

“For many of our seniors, the creeping costs of medical care, food and housing have forced them to stretch their limited incomes to the breaking point,” said Rep. Xavier Becerra of California, the top Democrat on the House Ways and Means Subcommittee on Social Security. “And after two years without any cost-of-living increases, our seniors are getting some much-needed relief.

“Ironically, some in Washington are calling for permanently reducing Social Security checks for today’s seniors and future retirees. As part of a deficit-reduction deal, many are calling on the ‘supercommittee’ to consider a new way to calculate the COLA, which would cut Social Security benefits by $112 billion over 10 years.”

The payroll tax for workers is 6.2 percent, which goes to Social Security, an amount matched by employers. Workers are paying 4.2 percent this year as part of a large tax-cut package passed in December. President Obama is pressing for another year for the tax break.

Also, the retirement earnings test exempt amounts will change in 2012.

The earnings limit for workers who are younger than “full” retirement age will be $14,640, while the limit for those turning 66 in 2012 will be $38,880. There is no limit on earnings for workers who are “full” retirement age or older for the entire year.