Social Security benefits will not automatically increase next year for 58 million Americans because of the low US inflation rate, the Social Security Administration announced on Friday. This is the second year in a row that retirees and millions of disabled workers and survivors of deceased workers will not receive an automatic cost of living adjustment.
It comes at a time when retirees' savings - often their only other source of income - are earning poor returns because of low interest rates. The average Social Security benefit is around $14,000 and experts say about one-third of retirees rely on the payouts from the government-run program for more than 90 percent of their income.
The maximum amount of wages that are taxed for Social Security program will also remain the same next year at $106,800, the Social Security Administration said. The Social Security benefit has been adjusted since 1975 if there is an increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year of a cost-of-living adjustment (COLA) to the third quarter of the current year, the Social Security administration said. "As determined by the Bureau of labour Statistics, there is no increase in the CPI-W from the third quarter of 2008, the last year a COLA was determined, to the third quarter of 2010, therefore, under existing law, there can be no COLA in 2011," the agency said.
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