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.