News sources reported on Sunday that for the second straight year in a row, the Social Security "Cost of Living Adjustment" (COLA) increase due in 2014 will be among the smallest since automatic increases were adopted in 1975.
This means millions of retirees, disabled veterans and federal retirees can expect a roughly 1.5 percent increase in their checks starting in January 2014. The raise will be small because consumer prices have not risen very much this year, despite a recovering economy.
The partial government shutdown resulted in the Labor Department not issuing September's inflation report, so the exact size of the COLA is not known at this time. The Cost of Living Adjustment is usually put out in October of every year, giving Social Security and other benefit programs the time needed to adjust their payments in time for January.
Almost 58 million retirees, disabled workers, their spouses and children get Social Security benefits every month in this country. With the average benefits check being about $ 1,162, a 1.5 percent raise would amount to $17.
The COLA also affects the benefits of over 3 million disabled veterans and around 2.5 million retired federal employees, as well as over 8 million people who receive Social Security Income, or SSI, the disability income for the poor.
The COLA is calculated using consumer prices for the months of July, August and September each year and comparing them to the same months in the previous year. If prices go up, then the benefits will go up starting with the benefits check in January.
Since 1975, the COLA has averaged around 4.1 percent. Historically, there has been only 6 times when it was 2.0 percent or less. In 2010 and 2011, there was no COLA al all because inflation was too low.