17 October 2009

Seniors Social Security Surprise

If you are currently collecting Social Security, there's a big surprise that's not happening in January. The usual 2%-3% increase in benefits just won't be there. Benefits for 2010 won't shrink but the lack of increase will affect many senior citizens.

For the first time in 3 decades, there won't be a cost of living adjustment (COLA). Social Security benefits are adjusted up each year to keep pace with inflation. These adjustments are based on the consumer-price index for urban wage earners between the 3rd quarter of the current year and the 3rd quarter of the previous year.

For some, their benefit could be lower factoring in premiums for Medicare Part B which are deducted from the monthly benefits. In the past the COLA has been enough to offset the increase in Part B premiums.

Medicare beneficiaries are protected by a provision that ensures that their Medicare premiums don't increase more than the increase in Social Security benefits (COLA).