More than 56 million Social Security beneficiaries will get a 1.7 percent cost-of-living adjustment for 2013, one of the smallest increases since the government began providing automatic annual adjustments for inflation.
The increase, announced today, will translate into an additional $21 per month for retired workers, according to the Social Security Administration, and bring average monthly benefits to $1,261. It will cost the government $14.3 billion in 2013.
The government began providing the automatic adjustments in 1975 so recipients don’t fall behind as prices rise. For 2012, beneficiaries received a 3.6 percent boost. The adjustment is based on the increase in a measure of the consumer price index.
“Amid rising costs for food, utilities and health care and continued economic uncertainty, the COLA helps millions of older Americans maintain their standard of living, keeping many out of poverty,” said Nancy LeaMond, executive vice president at AARP, a Washington-based organization that advocates on issues affecting older Americans.
The program provides assistance to 39 million retired workers and their dependents, 11 million disabled Americans and 6 million survivors of deceased workers.
About 8 million beneficiaries of the Supplemental Security Income program, which provides cash assistance to the disabled, blind and aged poor, will receive the same 1.7 percent increase beginning Dec. 31, the Social Security Administration said. Monthly benefits will grow to $710 from the current $698.
Almost 10 million Americans will pay more in Social Security payroll taxes in 2013 because the maximum amount of income subject to the levies will be adjusted upward to $113,700 from $110,100, the agency said.
Lawmakers searching for ways to reduce the budget deficit have considered reducing the annual benefit increases in part because many economists say the gauge that’s used to measure inflation overstates the rise in prices. That would mean the government is paying too much in cost-of-living adjustments.
The idea, part of the deficit plan offered by former Senator Alan Simpson and Bill Clinton’s one-time chief of staff Erskine Bowles, is opposed by advocacy groups for the elderly as well as many lawmakers. They say the yardstick that’s now used already understates the price increases faced by seniors because they spend a larger-than-average share of their budgets on medical care.
“It would be a shock to millions of seniors and disabled veterans to learn that some in Washington think their current COLAs are too generous,” Senator Bernie Sanders, a Vermont independent, said today in a statement.