Social Security recipients will get a cost-of-living adjustment of 3.6 percent in 2012, a welcome boost after two years of no increase.
Although it’s been two years since Social Security beneficiaries saw some additional respite from rising inflation, finally we’ll see a COLA increase for 2012 and an adjustment of 3.6%.
The COLA, or Cost Of Living Adjustment, has been a nearly annual increase in Social Security payments. Why? To keep benefits consistent with inflation. Otherwise, seniors would be at the mercy of rising prices on fixed incomes. Lean times in the economy, however, have meant cutting back COLA for the past two years, leaving many seniors with no choice but to further tighten their belts.
The 3.6% increase will be warmly received by many. For example, beneficiaries receiving $1,186 a month, the average for retired workers, will see monthly benefit increase of $43.
To be sure, it’s not a dramatic increase (and less than the last COLA of 5.8%), but it is better than no increase at all.
Post script: After I wrote this blog post, it was announced that Medicare's Part B premium will increase next year, by an average $3.50 per month.
Reference: AARP (October 19, 2011) “Social Security Beneficiaries Welcome 3.6 Percent COLA”