Aug 24, 2009

Millions face shrinking Social Security payments

Those receiving Social Security payments learned their COLA (cost of living allowance) has been taken away for the next two years.

This will be the first time without a cost-of-living increase since the annual adjustments began in 1975.

This, combined with the increased cost of prescription drugs, will cause seniors to see their social security payments actually shrink.

By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people on the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up.

The article at the link below says that cost of living adjustments are pegged to inflation, which has been negative this year, largely because energy prices are below 2008 levels.

Seniors who have seen their food and clothing costs increase in the past year will not be convinced that we have had negative inflation.

The Obama administration may pay for this at the polls in 2010 as seniors will be unhappy that their Social Security income stay the same and in some cases will go down while every member of congress will have received a very generous increase in their cost of living allowance.

More of the story here.