Social Security: No Cost-of-living Adjustments

As if our pocketbooks weren’t already feeling a pinch from the economic downturn, the U.S. government and even many companies are saying “No” to cost-of-living increases for 2010.

The Social Security Administration announced there will be no increase in benefits for January 2010 because there was no increase in the Consumer Price Index for urban wage earners and clerical workers from the third quarter of 2008 to the third quarter of 2009. So, 2010 marks the first time since Social Security began using this index in 1975 that it has given no cost-of-living increase.

Despite this, millions of Social Security recipients will get a $250 check from Uncle Sam to help compensate for no cost-of-living increase.

In the private sector, research done by accounting firm Grant Thornton shows that 65 percent of companies it surveyed are not giving raises for 2010. Some are cutting other benefits, such as health care, bonuses, and matching contributions to retirement plans.

While a cost-of-living adjustment of just 3 percent might not seem like much, for a person making $40,000 a year, the difference is $1,200, or $100 a month. In a time when many are struggling, losing a cost-of-living increase is certain to be an additional burden.