Every little bit helps as the saying goes, but the 3.6% Social Security cost of living allowance – or COLA, as it's called – is nothing to get excited about. As a representative payee for two beneficiaries receiving Social Security benefits and a beneficiary myself, we three, along with many other recipients, know that any increase at the beginning of the year will be consumed by rising costs of food, utilities, medicine and other necessities. Seniors and people with disabilities have unique expenses that cut deeply into government benefits.
COLA Returns after Two-Years of No Increase for Social Security Beneficiaries
The stagnant economy in 2009 and 2010 saw no COLA issued for 2010 and 2011. The last COLA was issued in 2009 (for the year 2008) at a rate of 5.8 percent. Briefly, the COLA is influenced by the previous year's third-quarter consumer price index for urban wage earners (CPI-W) and is calculated by factoring in the rise in inflation. No rise in inflation means no COLA.
Stimulus payments received in 2009 were supposed to help ease the COLA loss. Unfortunately for consumers, the money didn't stir the economy's growth as expected. As a result many seniors and people disabled sank below the poverty line.
The 3.6% COLA reflects a small sign of recovery perhaps, but it doesn't translate into much cash in hand. How much will beneficiaries and their dependents get? The increase in funds depends on what type of Social Security benefit(s) one receives and how much each is worth. Those seniors who get maximum retirement benefit amounts of $1,186 each month will get around $43 more beginning January 2012. Other recipients will get less money added to their checks.
COLA Siphoned by Expenses Unique to Seniors and Persons Disabled
Older people have costly needs unique to their age group and so do adults of any age that are disabled. The most common need is prescription medicine, some of which isn't covered by healthcare plans or pharmaceutical plans created for people in dire circumstances. Expenses might include modifications to the home environment, special clothing, dietary and personal supplies. Other things are needed as well, items like over-the-counter medications, orthopedic equipment, therapeutic treatments and more. Medicare premiums are also expected to take a bite out of the adjustment.
The AARP argues that a better way is needed to calculate the COLA. Carole Fleck, contributing writer for AARP's Bulletin says, "Advocacy groups, including AARP, argue that the CPI-W isn't an appropriate inflation measure for older adults because it doesn't accurately reflect what they spend money on."
The cost of prescription drugs is a good example of a "faulty measure of inflation" where elderly persons and adults with special medical needs are concerned. According to the AARP, elderly people, "... spend three times as much of their budgets on medical care as younger people."
How Does the COLA Affect Home Caregivers?
Caregiver family members – sons, daughters, spouses and others – often get paid nothing for their work. They might also supplement what money their aging parent (or disabled family member) gets each month from Social Security, especially if the person (beneficiary) lives in his or her own home. Otherwise, power and/or water might get turned off. Food and medications might run out. Even elders/persons disabled who live under the same roof with a family caregiver often cannot make ends meet without financial assistance.
What will the COLA buy? Not much, considering the cost of food, electricity, gas and everything else is going up. At best the few extra dollars might buy a few days worth of food, and that's stretching it.
What are seniors and people with disabilities supposed to do? No one seems to have a sufficient answer. Many caregiver families have already been drained of savings and retirement funds while trying to assist family members whose only income is Social Security.
The COLA is a welcome bit of relief, but those who are barely getting by know the amount is too small to make any significant difference. Plus, the rising costs everywhere else in our lives will devour the COLA as if it never existed. We keep on going for as long as we can. After that, who knows.
Sources
- AARP Bulletin (Online) "Social Security Beneficiaries Wecome 3.6 Percent COLA" (Carole Fleck, Oct. 2011).
Mary King - Mary King is a Suite101 Topic Editor for the Caregiver Support and Home Management sections. She has authored 5 teen-based novels.
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