For the past two years those who receive Social Security Disability and Retirement have not received a cost of living increase to their benefit amount. But in 2012 this is expected to change, when an announcement is made this week and will be effective starting this January.

This increase is because for the first time in the last 2 years the consumer price index – a measure of how much it costs consumers, on average, to buy things like food and transportation – rose considerably from a year ago.

Social Security cost-of-living adjustment (or COLA) is calculated using this index, and payments are increased when the measure jumps from one year to the next.

Based on this index data, the raise is likely to be about 3.5%. A person who receives $10,000 from Social Security last year would receive an extra $350 in 2012.

However, some of this increase will be lost to higher Medicare premiums, which are deducted from Social Security payments.

Medicare Part B premiums for 2012 are expected to be announced next week, and the trustees who oversee the program are projecting an increase.

The federal government announced on October 15, 2010 that Social Security Disability and Social Security Retirement recipients will not receive a cost-of-living adjustment in 2011. This will be the second year in a row that there has not been a cost-of-living increase.

The absence of a cost-of-living adjustment, calculated under a formula set by law, will be a shock to older Americans and the disabled already hit by plummeting home values, investment losses and rising health costs. More than 50 million people receive some form of Social Security benefits.

Before 2010 Social Security recipients had received automatic cost-of-living adjustments every year since 1975. The increase in 2009 was 5.8 percent. By law, Social Security benefits cannot go down.

The cost-of-living adjustment 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.

The Congressional Budget Office, has predicted that inflation would remain low for several years, so it is possible that Social Security might not pay a cost-of-living increase for several years.

Republican-held Congress might look to raise the retirement age to 70, House Minority Leader John Boehner (R-Ohio) suggested Monday June 28. Boehner, the top Republican lawmaker in the House, said raising the retirement age by five years, indexing benefits to the rate of inflation and means-testing benefits would make the massive entitlement program more solvent. “We’re all living a lot longer than anyone ever expected,” Boehner said in a meeting with the editors of the Pittsburgh Tribune-Review. “And I think that raising the retirement age — going out 20 years, so you’re not affecting anyone close to retirement — and eventually getting the retirement age to 70 is a step that needs to be taken.” The GOP leader said Social Security was the most important entitlement to reform, though he also pledged Republicans would bring legislation to the floor to repeal and replace the health care reforms passed earlier this year if the GOP wins back control of the House this fall.

Source: The Hill (June 29, 2010)

The Social Security Administration (SSA) will send checks to anyone who is eligible for Social Security Disability benefits or Social Security Retirement Benefits and is living abroad. However, there are a few countries where the SSA is not allowed to send checks. If a person eligible for benefits moves to Cuba or North Korea they cannot receive any checks while they are in either country, but they can get any withheld checks if they go to a country where paychecks can be sent.

In addition, the SSA generally does not send Social Security checks to Cambodia, Vietnam, or areas that were in the former Soviet Union (other than Armenia, Estonia, Latvia, Lithuania, and Russia), but those eligible for benefits may be able to apply for an exception. In such cases, those eligible for benefits may have to agree to certain conditions, such as appearing in person at the U.S. embassy each month, to receive benefits.

The rules for receiving Social Security disability or retirement overseas do not apply to Supplemental Security Income (SSI) benefits. Most recipients of SSI are not entitled to benefits outside the United States. SSI benefits will stop if a recipient is outside the United States for more than 30 days, and benefits won’t start up again until the recipient is back in the country for at least 30 days. However, there are exceptions for dependent children of military personnel and students studying abroad.

I have received a question regarding whether or not a person is entitled to retirement benefits on their ex-spouse’s Social Security record. The law on this is as follows:

An unmarried divorced spouse is entitled to benefits starting at age 62 if they had been married for at least 10 years and there ex- husband or ex wife is at least 62 years old (retired and receiving benefits or not) or are receiving Social Security Disability benefits.

A divorced spouse cannot receive this benefit if they have remarried unless the marriage is to a person already receiving benefits as a widow, widower, parent, or disabled adult child.

If the ex-spouse is 62 but not retired, then the divorce must have occurred at least two years before the divorced spouse can receive the benefits. If the divorced spouse was entitled before the divorce to benefits, there is no waiting period.

As for the amount of benefits that can be received:

A divorced spouse at full retirement age is entitled to 50% of their ex-spouse’s retirement benefit.

At age 62 the divorced spouse is entitled to between 32 1/2 % and 35 5/6 % of their ex-spouse’s retirement benefit depending on the divorced spouse’s full retirement age.

If the divorced spouse is also insured for their own retirement benefit, she/he would only receive whatever amount from their ex-spouse that is necessary to make up the difference.