Social Security Benefits Will Not Automatically Increase In 2010

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The Social Security Administration revealed Thursday that more than 57 million Social Security recipients will not receive an automatic increase in benefits in 2010 due to a drop in consumer prices over the past year.

According to the administration, this will be the first year without an automatic Cost-of-Living Adjustment (COLA) since they went into effect in 1975.

"Social Security is doing its job helping Americans maintain their standard of living," said Michael Astrue, Commissioner of Social Security. "Last year when consumer prices spiked, largely as a result of higher gas prices, beneficiaries received a 5.8 percent COLA, the largest increase since 1982."

"This year, in light of the human need, we need to support President [Barack] Obama's call for us to make another $250 recovery payment for 57 million Americans," Astrue said.

On Wednesday, Obama called on Congress to extend payments of $250 to seniors and those with disabilities for an additional year.

Obama said that the first of those payments was enacted through the $787 billion economic recovery and stimulus package, but in light of continuing economic hardship, it would be appropriate to issue a new round for 2010.

"Even as we seek to bring about recovery, we must act on behalf of those hardest hit by this recession," Obama said. "That is why I am announcing my support for an additional $250 in emergency recovery assistance to seniors, veterans, and people with disabilities to help them make it through these difficult times."

The Social Security Act calls for Social Security benefits to increase automatically each year if there is an increase in consumer prices from the third quarter of the previous year to the third quarter of the current year.

This year, there was no increase in consumer prices from the third quarter of 2008 to the third quarter of 2009.

The Social Security Administration said some other changes that would normally take effect in January 2010 based on the increase in average wages also would not take effect, even though average wages did increase.

Since there is no COLA, the Social Security Administration said the statute also prohibits an increase in the maximum amount of earnings subject to the Social Security tax as well as the retirement earnings test exempt amounts.

The Social Security Administration revealed Thursday that more than 57 million Social Security recipients will not receive an automatic increase in benefits in 2010 due to a drop in consumer prices over the past year. According to the administration, this will be the first year without an automatic Cost-of-Living Adjustment (COLA) since they went into effect in 1975. (Market News Provided by RTTNews)