Social Security Cost of Living Increase
Scheduled for 2009
The hike is the biggest since 1982
For the 8.5 million aging individuals and
those with disabilities who rely on Social Security Disability Insurance (SSDI)
or are awaiting a decision on their application for benefits, the U.S.
government has good news: There will be a 5.8 percent cost-ofliving adjustment
(COLA) increase in Social Security payments beginning January 2009.
The increase is the biggest since 1982. It
will result in more than 34.9 million Americans receiving a slightly bigger
check in 2009, increasing the typical retiree’s monthly check by $63 --
from $1,090 to $1,153 a month (online: go to Allsup.com, search “SSDI
COLA”). The 2009 cost-of-living increase will go to more than 55 million
Americans receiving Social Security benefits. The Social Security COLA is tied
to the annual increase in the Consumer Price Index, which takes into account
the rate of inflation for the goods and services people buy
Data from the Bureau of Labor
Statistics’ Consumer Price Index for Urban Wage Earners and Clerical
Workers (CPI-W) for the third quarter of the previous year is used to set the
following year’s COLA. For the quarter ending Sept. 30th, 2008, the CPI-W
was 5.8 percent.
“The Social Security costof- living
adjustment isn’t about getting ahead,” said Paul Gada a financial
planner for an advocacy group known as Allsup. “At best, it’s about
keeping up. Even that is going to be tough, as people have already experienced
higher living expenses this year with no sign of that letting up near term.
“It’s very difficult when your
income is fixed, but your expenses are not fixed and generally just seem to be
increasing. But the first step is to honestly assess your financial
situation.” Allsup offers a special calculator to help people learn to
reverse credit card debt and a personal debt consolidation calculator. 
Because many individuals with severe
long-term disabilities are unable to work, they are more likely to be
low-income earners. But people with long-term disabilities cannot afford to be
without some plan to cover health-related costs on an ongoing basis. People
with disabilities who are eligible should examine all their Medicare options,
including traditional Medicare (Parts A and B) with supplemental insurance
(Medigap) and prescription drug (Part D) coverage, as well as Medicare
Advantage plans. |
