No 2010 COLA Increase in Social Security – Is “Stimulus” Payment an End Run on the System

Category: Financial and taxes in retirement

October 15, 2009. It’s official, there will be no social security COLA (Cost of Living Allowance) increase in 2010, the first time this has happened since 1975. The reason is simple, this year there was no increase in the Consumer Price Index (CPI-W) from the third quarter of 2008 to the third quarter of 2009, hence no need for a payment.

A press release from the Social Security Administration is advocating passage of a special 2nd round stimulus package for seniors, veterans, and the disabled (the same people who would have received a COLA). The amount of the payment in the Economic Recovery Act
Payment for 2010 would be $250, about a 2% increase to the average social security recipient. The press release has one of the great non-sequiturs of the season as its reason for recommending passage of the proposal: “Last year when consumer prices spiked, largely as a result of higher gas prices, beneficiaries received a 5.8 percent COLA, the largest increase since 1982. This year, in light of the human need, we need to support President Obama’s call for us to make another $250 recovery payment for 57 million Americans.”

So let’s see, prices went up in 2008 so we needed an increase, but in 2009 prices went down but the “human need” went up. Conservative critics are citing the special stimulus package as an end-run on social security system’s rules, building a slippery slope where annual increases come no matter what happens to prices. In our mind the criticism seems valid, particularly since the only recipients of this stimulus program would be social security recipients. If we really need another round of stimulus, let’s give it to everyone and preserve the integrity of the social security system rules.

What do you think?
Sound off in our Comments section below.

For further reference:

When to Start Taking Social Security
No Social Security increase planned for 2010

Posted by John Brady on October 15th, 2009

9 Comments »

  1. […] October 15, 2010 – It’s official – no social security increase in 2010 – $250 payment pushed. It will be the first time in 3 decades, but there will be no cost-of-living […]

    by » No Social Security Increase in 2010 Topretirements — October 16, 2009

  2. You have to see today’s NY Times “Economic Scene” column by David Leonhardt. He poses the question, if you wanted to use the $250 grant to help one group of people who would it be: teenagers and young adults, the unemployed, taxpayers of the future, or the group that survived the last depression? He quotes Rosanne Altshuler of the Tax Payer Center that the proposed $250 checks “seem to be pure pandering to seniors”. Even some of the President’s economic advisors seem to think this is a nutty idea.

    by papajuan — October 27, 2009

  3. problem is formula does not accurately represent the cost of living for the majority of seniors living primarily off of social security. i live pretty much the same from month to month. Same grocery list, same utility bills, same bus fare, same medical needs, samo, samo, samo. I know my dollars do not go as far as they did this time last year. Electric rates are up. Prescription drugs are up. Copay at the Dr. is up. Dental cleaning is up. Same bag of groceries is up, up, up, up. Maybe the price of a Lexus is down,or a Cruise to the Med. is down, but these aren’t on my survival list. So lets spend less time on $250.00 here and there, and 2% one year, 3% the next, 1.5% the next and the 5.8% and then nothing and lets get the powers to be to address the real the problem. The CPI-W just doesn’t work. I am not a clerical worker. I am a retired veteran who deserves more.

    by paraplegic — November 3, 2009

  4. get real under $5.00 a week gets me 1/2 gal of milk maybe

    by bj — November 10, 2009

  5. If the drug companies can raise the cost of drugs by 10% a year.. and the politicians can raise there expense pay in ny at least 15% a day.. in 2010 why cant seniors have ssi increase of 3% 😈

    by joe v — November 21, 2009

  6. OK So there wont be an Increase in Disability and SSI and VA Benefits. BUT They increase the medicare premium by almost $20.00 per month. How is this fair. Its now up to $110.00 per month to carry Insurance, and you still have co pays and HIGH Deductibles. And this $250.00 one time payment is going to do what? Buy Groceries for ONE month, what about the other 11 months of the year, where they pay more money for insurance, higher co pays and prescription drug costs? How is this Fair. The only reason people Complain about recipients of SSI/SSD/VA benefits getting another Payment is cause they wont get one. Did you hear them complain cause you were able to get a HUGE stimulus payment back? Probably not!

    by jnmburk — January 27, 2010

  7. The government must not shop at the same grocery stores that I do. Prices of many items (not just on food)have gone up. It’s unfortunate that the stimulas money sent to individuals probably came out of the pockets of those living on social security. That stimulas money may have made someone look good for a short time but as always “what goes round comes round.” It appears the money was probably just switched from one hand to the other.

    by Reba Deal — February 17, 2010

  8. hummm this seems strange that some of us recieved a stimulus and at the end of the year while filing taxes it is taken back, Fact i was called back into the tax office so the stimulus payemnt was deducted. actually it should have never been given out. this is just stupid especially during the times we are facing. since im on the roll every swing Joe that is elligable age wise should serve some time in the military. and for thos that are still capable be pulled from positions to do service, Hummmm makes sense to me. get a taste for the real world of hardship.

    by Terry L. Greer — April 2, 2010

  9. IF I DREW A CHECK THAT WAS 6 DOLLARS LESS IN DISSABILITY EACH MONTH,THEN I WOULD NOT HAVE TO PAY $110.00 A MONTH INSURANCE AND ALL MY CO-PAYS. 1242.00 THE LIMIT IS 1236.00. IF ID WORKED LESS..HHHHMMM

    by DONALD MILLER — November 9, 2010

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