No Social Security Boost for Seniors This Year

No Social Security Boost for Seniors This Year

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Consumer prices rose 0.3 percent last month, the Labor Department reported today, virtually guaranteeing that Social Security recipients, for the second year in a row, won't get a cost-of-living (COLA) increase in 2011.

The CPI for urban wage earners and clerical workers, the index on which COLAs are based, is higher than it was a year ago, but it's nevertheless lower than it was in the third quarter of 2008. The index must exceed that previous third-quarter high before a COLA is paid.

The issue of a COLA won't be determined until the September CPI is available next month. But it would take a huge one-month jump in prices--of which there's no sign now--to generate even the tiniest COLA for next January.

Last year seniors got a very large 5.8 percent COLA after energy prices soared in 2008. Energy prices then fell, while the bursting of the housing price bubble has held down the cost of shelter, a major component of the index.

There is a silver lining for most seniors, however. In the absence of a COLA, premiums for Part B of Medicare--the part covering doctors' fees, tests and outpatient treatments--cannot rise except for couples with adjusted gross incomes of under $170,000 and individuals with an AGI of less than $85,000.

covered the Federal Reserve and the economy for 25 years at the Washington Post before joining Bloomberg News in 2004. In 2009 he began writing freelance pieces for, among others, Thomson Reuters, and is widely recognized for his ability to interpret the Fed.