No Social Security cost-of-living increase for 2016
ORLANDO, Fla. (WOFL FOX 35) - For just the third time in 40 years, millions of Social Security recipients, disabled veterans and federal retirees can expect no increase in benefits next year, unwelcome news for more than one-fifth of the nation's population.
"Don't depend on the government," said 66-year-old retiree Janet Rothenberg. Like her, some 65 million Americans found out on Thursday that they won't be getting an increase in their Social Security next year. "I'm disappointed," she said. Rothenburg has been on Social Security for two years. She said you can't rely on that revenue alone. "For the young, absolutely supplement. Don't count on it, and supplement now," she warned.
Americans can blame low gas prices. By law, the annual cost-of-living adjustment, or COLA, is based on a government measure of inflation, which is being dragged down by lower prices at the pump. Prices actually have dropped from a year ago, according to the inflation measure used for the COLA.
"It's a very high probability that it will be zero," said economist Polina Vlasenko, a research fellow at the American Institute for Economic Research. "Other prices — other than energy — would have to jump. It would have to be a very sizable increase that would be visible, and I don't think that's happened."
Congress enacted automatic increases for Social Security beneficiaries in 1975, when inflation was high and there was a lot of pressure to regularly raise benefits. Since then, increases have averaged 4 percent a year.
Only twice before, in 2010 and 2011, have there been no increases. Almost 60 million retirees, disabled workers, spouses and children get Social Security benefits. The average monthly payment is $1,224.
The COLA also affects benefits for about 4 million disabled veterans, 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. Many people who get SSI also receive Social Security.
"Had I known then what I know now, I would've started saving a long time ago and just force yourself to put money away," said John Johnson. Johnson has been retired for about a year-and-a-half and said not having an increase may hurt a bit, but planning ahead will get you by. "We've learned to live on what we're getting, that's the main thing. If you know what you're doing, then you can live through it."
Some information taken from the Associated Press.