Social Security And You
Commentary By James Glasser, Manager,
Far Rockaway Social Security Center
Each year, all Social Security and Supplemental Security Income (SSI) payments increase automatically based on the rise in the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), from the third quarter of the prior year to the corresponding period of the current year. This year, benefits will go up by 3.3 percent.
The 3.3 percent COLA will begin with benefits that nearly 49 million Social Security beneficiaries receive in January 2007. Increased payments to more than 7 million Supplemental Security Income beneficiaries will begin on December 29, 2006.
Without an annual COLA, benefit payments would not have the same spending power. This is especially important as today's retirees live longer, with life expectancy at an all-time high. That is why many financial planners point out that the annual COLA is such an important feature, and one that relatively few private pensions have.
While the annual COLA is automatic today, prior to 1975 it took an act of Congress to increase Social Security benefit payments. The first increase was not put into effect until 1950 - a full decade after monthly benefits began. If you would like to learn more about COLAs, including the one recently announced for 2007, visit Social Security's website at www. socialsecurity.gov , where you also will find a wealth of information about Social Security and its programs.