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Social Security raise among lowest in years

| Sunday, Oct. 13, 2013, 6:27 p.m.

WASHINGTON — For the second consecutive year, millions of Social Security recipients, disabled veterans and federal retirees can expect historically small increases in their benefits starting in January.

Preliminary figures suggest a benefit increase of about 1.5 percent, which would be among the smallest since automatic increases were adopted in 1975, according to an analysis by The Associated Press.

Next year's raise will be small because consumer prices, as measured by the government, haven't gone up much in the past year.

The exact size of the cost-of-living adjustment, or COLA, won't be known until the Labor Department releases the inflation report for September. That was supposed to happen on Wednesday, but the report was delayed indefinitely because of the partial government shutdown.

The COLA usually is announced in October to give Social Security and other benefit programs time to adjust January payments. The Social Security Administration has not indicated that raises would be delayed because of the shutdown, but advocates for seniors said the uncertainty is troubling.

Social Security benefits have continued during the shutdown.

Automatic COLAs were adopted so that benefits for people on fixed incomes would keep up with rising prices. Many seniors, however, complain that the COLA sometimes falls short, leaving them little wiggle room.

David Waugh of Bethesda, Md., said he can handle one small COLA, but several consecutive ones make it hard to plan for unexpected expenses.

“I'm not one of those folks that's going to fall into poverty, but it is going to make a difference in my standard of living as time goes by,” said Waugh, 83, who retired from the United Nations.

Nearly 58 million retirees, disabled workers, spouses and children get Social Security benefits. The average monthly payment is $1,162. A 1.5 percent raise would increase the typical monthly payment by about $17.

Since 1975, annual Social Security raises have averaged 4.1 percent. Only six times have they been less than 2 percent, including this year, when the increase was 1.7 percent. There were no COLAs in 2010 or 2011 because inflation was too low.

The COLA affects benefits for more than 3 million disabled veterans, about 2.5 million federal retirees and their survivors, and more than 8 million people who get Supplemental Security Income, the disability program for the poor.

By law, the COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, a broad measure of consumer prices generated by the Bureau of Labor Statistics. It measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education.

The COLA is calculated by comparing consumer prices in July, August and September each year with prices in the same three months from the previous year. If prices go up during the course of the year, benefits follow suit, starting with payments delivered in January.

This year, average prices for July and August were 1.4 percent higher than they were a year ago, according to the CPI-W.

Several economists said there were no dramatic price swings in September to significantly increase or decrease the projected COLA. That means the projection shouldn't change by more than a few tenths of a percentage point, if at all.

Polina Vlasenko, a research fellow at the American Institute for Economic Research, expects the COLA to be between 1.4 percent and 1.6 percent.

Her projection is similar to those done by others, including AARP, which estimates the COLA will be 1.5 percent to 1.7 percent. The Senior Citizens League estimates it will be about 1.5 percent.

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