According to the New York Times, for the first time in thirty years, federal forecasters predict that Social Security recipients will not get any increase in their benefits next year.
The absence of a cost-of-living adjustment, calculated under a formula set by law, will be a shock to older Americans already hit by plummeting home values, investment losses and rising health costs. More than 50 million people receive Social Security.
The forecasts, by the Obama administration and the Congressional Budget Office, indicate that Social Security beneficiaries will not receive any cost-of-living increase in 2010 or in 2011. The COLA is intended to preserve the purchasing power of Social Security, by increasing benefits to keep pace with consumer prices. In the last year, overall inflation has been low, largely because of the economic downturn and a decline in energy prices.
A freeze in Social Security benefits would have major implications for Medicare because the COLA, in effect, puts a cap on premiums for Part B of Medicare, which covers doctors’ services.
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