A new bill in Congress would provide a one-time $250 payment to senior citizens, veterans and the disabled in the event that no Social Security cost-of-living adjustment is payable in 2011.
House Ways and Means Social Security Subcommittee Chairman Earl Pomeroy, D-N.D., introduced the Seniors Protection Act of 2010 on Friday. The bill would assist 57 million American seniors, retired and disabled veterans, and disabled individuals with a one-time $250 payment in the event that no inflation adjustment is announced this fall.
The annual Social Security cost-of-living adjustment, or COLA, is determined automatically according to a formula which has been in the law since 1975. Because of a lack of sufficient economic growth (and correspondingly, little increase in prices) in 2009 and 2010, the Social Security Administration is likely to announce on Oct. 15, 2010 that there will be no COLA for Social Security benefits for 2011.
For the first time ever, the result will be a second consecutive year where Social Security retirees, veterans, and people with disabilities saw no increase in their monthly Social Security, Supplemental Security Income, Veterans Administration Disability Pension and Compensation, and Railroad Retirement benefits.
The COLA is determined by comparing the level of inflation from the third quarter of the current year to the year prior. If positive, then the difference is applied to benefits the following January. The spike in energy costs in the summer of 2008 resulted in a COLA of 5.8 percent, paid starting in January 2009. Prices dropped in the fall of 2008, and have not yet regained the level of the third quarter of 2008.
Our seniors who depend on their very modest Social Security benefits worry about meeting their basic day-to-day expenses, Pomeroy said in a statement. I have heard these concerns from seniors in my district and from members of Congress who are hearing these same worries from their seniors. I am pleased those members are joining me in introducing the Seniors Protection Act of 2010.
Social Security benefit levels are quite modest only $14,000 a year for the average retiree. Yet, the median income for senior households is a mere $24,000, reflecting just how much Social Security means to most elderly Americans. Six in ten seniors rely on Social Security for more than half of their income. About a third of retirees have little other than Social Security to live on.
Although economy-wide measures of inflation have shown no net increase since the last COLA, which reflected price levels in the third quarter of 2008, Medicare premiums and health care costs have continued to rise. Moreover, seniors other sources of income have weakened as a result of the economic downturn: the financial collapse reduced the value of their IRAs; interest rates are low, reducing income from seniors savings; and the housing crash reduced seniors home equity. The one-time $250 payment for retirees and other beneficiaries would represent less than 2 percent of the average annual Social Security benefit.
The legislation is supported by at least two senior citizen groups: the National Committee to Protect Social Security and Medicare, and the Alliance for Retired Americans.
Seniors are struggling to get by, said Edward F. Coyle, executive director of the Alliance for Retired Americans. $250 may not seem like much on Wall Street, but to retirees on Main Street it could be what allows them to pay their electric bill or buy groceries. We must make sure Social Security meets today's basic needs."
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access