No Cost of Living Adjustment for Retirees in 2011

The Social Security Administration has announced there will be no increase in Social Security benefits payable in January 2011, nor will there be an increase in SSI payments. Beneficiaries in other federal programs, including civil service and military retirement, railroad retirement and those drawing veterans’ compensation and pensions, also will not receive a COLA in 2011 because their COLAs are tied to Social Security’s under current law.

This is the second consecutive year that there will be no cost-of-living adjustments. The Department of Labor released data today indicating that consumer prices for the third quarter of 2010 rose by 1.5 percent over last year, but dropped by 0.6 percent when compared to the same period in 2008. Although there has been a slight increase in prices over the past year, the government formula for COLAs requires that prices must have risen higher than when the last increase was awarded.

This is the first time in 35 years that there has been no adjustment in back-to-back years. Congress approved a one-time payment of $250 for Social Security annuitants last year and the White House proposed a similar payment in its 2011 budget, but Congress has not yet approved such a payment.

In April 2009, the Congressional Budget Office projected, that under current law there would be no Social Security COLA for 2010 to 2012.

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