Monday, August 24, 2009

Social Security Expects No COLAs for 2 Years

Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise.

The trustees who oversee Social Security are forecasting that there will be no cost-of-living adjustment for the next two years. That has not happened since automatic increases were adopted in 1975.

By law, Social Security benefits cannot decrease. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to rise slightly.

Cost-of-living adjustments are pegged to inflation, which has been negative this year, largely because energy prices are below 2008 levels.

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