Social Security benefits to see small increase in 2014

Photo of a dollar bill on a weighing scale
Modest COLA increase

Benefits under the Social Security Disability Insurance and Supplemental Security Income programs will rise by 1.5 percent in 2014, the Social Security Administration announced October 29.

The increase, known as the cost-of-living adjustment (COLA), is mandated by law. The increase is the smallest since COLA began in 1975, though there was no adjustment in either 2010 or 2011 because of the recession.

The increase also applies to standard Social Security benefits for people over age 65.

COLA is measured by price changes in food, housing, clothing, transportation, energy, medical care, recreation and education, according to an Associated Press article. During budget discussions surrounding the fiscal cliff and the most recent government shutdown, much focus has been on a proposal to change the COLA to the chained consumer price index (CPI).

Under this formula, cost adjustment would be slightly lower because the CPI assumes that as prices increase, consumers switch to lower cost alternatives, as described by the AP.

For advocates for the elderly and people with disabilities, the CPI is unacceptable.

“By providing protection against inflation, the COLA helps beneficiaries of all ages maintain their standard of living, keeping many from falling into poverty,” AARP executive vice president Nancy LeaMond told the AP. “The COLA announced today is vital to millions, but at an average of just $19 per month, it will quickly be consumed by the rising costs of basic needs like food, utilities and health care.”