House Democrats will move ahead with legislation to provide Social Security recipients with a one-time $250 payment. The Social Security Administration announced last Friday that there will be no automatic Cost-of-Living-Adjustment (COLA) for 2011, which means that for the first time ever, 2011 will be the second consecutive year that Social Security retirees, veterans, and people with disabilities will see no increase in their monthly Social Security, SSI, VA Pension and Compensation and Railroad Retirement benefits. This unprecedented situation is a result of economic conditions, not the result of Congressional or Presidential action or inaction.
“The lingering effects of the worst economy since the Great Depression mean Americans who need Social Security to survive are in danger of not being able to afford even the basic necessities of life, like food and medication,” said Congresswoman Laura Richardson (D—37th District). “We will act quickly to enact a one-time $250 payment to seniors, veterans, and people with disabilities who receive Social Security to help them make ends meet during this tough time, when housing values are down, other retirement income is volatile, and many are facing rising expenses.
“As the representative of 52,000 seniors in California’s 37th Congressional District, I wholeheartedly support H.R. 5987, the Seniors Protection Act, which will provide a $250 payment to about 54 million Americans in lieu of no increase in their monthly income,” Richardson added. “The President has already budgeted for this, and we can do this in a fiscally responsible way. We can’t leave seniors on Main Street behind as we begin this recovery.”
The COLA is automatically calculated using data on inflation published by the Bureau of Labor Statistics (BLS). October 15 is the day BLS releases the final economic factor that the Social Security Administration uses to calculate the annual COLA. In 2009, Social Security recipients saw a 5.8-percent increase in their benefits, the largest since 1982, as a result of rising costs; but in 2010, they saw no COLA at all. Social Security benefit levels are modest— only $14,000 a year for the average retiree.
The median income for senior households is just $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, and about a third of retirees have little other than Social Security on which to live.
In addition, Richardson recently introduced the Social Security Safety Dividend Act of 2010. If signed into law, this legislation will extend the intent of H.R. 5987 by automatically issuing Social Security beneficiaries a $250 check in any year that a cost of living adjustment (COLA) is not increased.
For many seniors, Social Security is their only source of income, making it difficult to make ends meet as the cost of living continues to rise. In years when the Consumer Price Index (CPI) determines the average American’s purchasing power to be low, Social Security benefits are supplemented by a cost-of-living adjustment. However, in years when the CPI formula deems a COLA unnecessary, the real cost of living that seniors face continues to rise.
“This additional income can be used to pay for prescription drugs, gas for their cars, utility bills or other unforeseen expenses,” Richardson said. “Though a modest sum, providing this extra income in years not adjusted for the rising cost of living will help increase seniors’ financial security and peace of mind in these tough economic times.”
