As expected for some time now, the Social Security Administration (SSA) recently confirmed on their web site that there will not be an automatic cost-of-living-adjustment (COLA) for those who receive monthly Social Security and Supplemental Security Income benefits in 2010.
Under current social security laws, Social Security and Supplemental Security Income benefits increase automatically each year based on the inflation measure known as the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Each prospective year’s COLA is determined based on the change in the CPI-W from the third quarter of the prior year to the current year’s third quarter. Therefore, the COLA for 2010 is based on the change in the CPI-W from the third quarter of 2008 to the third quarter of 2009. Since there was no increase in the CPI-W for that period, there would be no COLA increase for 2010.
According to the SSA, this would be the first time since 1975 (when COLAs went into effect) that an automatic COLA will not be made. To make for the lack of the COLA increase for next year, some including the commissioner of the SSA, Michael Asture, are calling for the Obama Administration to make an additional $250 recovery payment to people who receive Social Security and Social Security Income benefits.
In addition to holding Social Security and Social Security Income benefits flat for 2010, the lack of an automatic COLA increase also prevents other amounts from increasing. For example, the maximum amount of earnings that are subject to Social Security taxes for 2010 will remain at the current 2009 amount of $106,800 dollars. Also, the retirement earnings test exempt amounts for 2010 remain unchanged. If you will not reach your Normal Retirement Age (NRA) anytime during 2010, you can year $14,160 dollars before your Social Security benefits are reduced. If you will reach your NRA during 2010, you can earn $37, 680 dollars for the months in 2010 prior to reaching your NRA, before your Social Security benefits are reduced.
For more information, visit the SSA’s web site at http://www.ssa.gov/.
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