WASHINGTON (AP)— Another year, another small raise for millions of people who rely on Social Security, veterans’ benefits and federal pensions.
Preliminary figures suggest next year’s benefit increase will be roughly 1.5 percent, according to an analysis by The Associated Press. The increase will be small because consumer prices, as measured by the government, haven’t gone up much in the past year.
For the second year in a row, it would be one of the lowest raises since automatic adjustments were adopted in 1975.
The exact size of the cost-of-living adjustment, or COLA, won’t be known until the Labor Department releases the inflation report for September. That was supposed to happen Wednesday, but the report was delayed indefinitely because of the partial government shutdown.
More than a fifth of the country is waiting.
Nearly 58 million retirees, disabled workers, spouses and children get Social Security benefits. The average monthly payment is $1,162. A 1.5 percent raise would increase the typical monthly payment by about $17.
The COLA also affects benefits for more than 3 million disabled veterans, about 2.5 million federal retirees and their survivors and more than 8 million people who get Supplemental Security Income, the disability program for the poor.
The COLA is usually announced in October to give Social Security and other benefit programs time to adjust January payments. The Social Security Administration has given no indication that raises would be delayed because of the shutdown, but advocates for seniors said the uncertainty was unwelcome. Social Security benefits have continued during the shutdown.
David Certner of AARP said seniors are getting squeezed financially from many sides. Retirement portfolios took a big hit when the markets collapsed a few years ago, and even though the markets have rebounded, safer investments favored by older Americans are paying relatively low interest rates.
“Social Security COLAs have been low and anybody who’s trying to live off interest rates and getting returns on any of the meager savings they have is getting killed because there’s no return on your CDs or other fixed income assets,” Certner said. “The one bright spot is that health care costs have slowed down. But at least on the income side, it has been a pretty tough few years in terms of trying to keep up with expenses.”
Automatic COLAs were adopted so that benefits for people on fixed incomes would keep up with rising prices. Many seniors, however, complain that the COLA sometimes falls short, leaving them little wiggle room.
Since 1975, annual Social Security raises have averaged 4.1 percent. Only six times have they been less than 2 percent, including this year, when the increase was 1.7 percent. There was no COLA in 2010 or 2011 because inflation was too low.
The cost-of-living adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a measure of consumer prices generated by the Bureau of Labor Statistics.
Gasoline prices are down 2.4 percent from a year ago while food prices are up slightly, according to the August inflation report. Housing costs, meanwhile, went up 2.3 percent and utilities increased by 3.2 percent.
Medical costs went up less than in previous years but still outpaced other consumer prices, rising 2.5 percent.
“In years with high COLA’s, a lot of that had to do with fuel prices and in some cases, food prices. Neither of those increased much this year,” said Polina Vlasenko, a research fellow at the American Institute for Economic Research. Vlasenko. “So that kept the lid on the overall increase in prices.”