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COLA increase to be small for 2015

On Behalf of | Nov 30, 2014 | Care Planning

For many of our readers, part of getting older means living on a fixed income. This may be due to the main source of income being Social Security benefits. It may also be due to the fact that the largest expenses that many senior citizens have are taxes and housing expenses; both of which tend not to go down as the years pass by.

With that, the buying power that some senior citizens tends to decline, unless something is done about it. Because of this, the federal government has included an annual increase to Social Security benefits to defend against inflation. This increase, known as a cost of living adjustment (COLA) is based on changes in the consumer price index, which measures the costs of a host of items and services that people use on a regular basis.

For 2015, the COLA increase is unfortunately not going to be much. The Social Security Administration announced that next year’s increase will be 1.7 percent. It will be the third increase in a row that will be less than two percent. For many retirees, disabled Americans and poor people, the increase does not do a great deal to stem the influence of inflation.

For instance, the cost of prescription medications continues to rise. According to a New York Times report, the costs for some generic prescription drugs have soared over the last 18 months, which prompted a Senate committee hearing to discuss options for people on fixed incomes so that they do not have to choose between important medicines and housing costs.