Seniors to get puny Social Security COLA

Social Security recipients will receive a cost-of-living adjustment for 2013, but it will be only about half as large as the COLA they received this year, according to an unofficial estimate by the American Institute for Economic Research, an independent economic research group. AIER economists estimate the 2013 increase to be between 1.5% and 1.7%, 2 percentage points below the 3.6 % increase this year. The Social Security Administration will announce the official COLA for 2013 tomorrow. The federal government determines the size of a Social Security COLA based on the percentage change in the Consumer Price Index for Urban Wage Earners from the third quarter of one year to the third quarter of the next. “Because the CPI-W includes items with prices that rise more slowly than everyday purchases — refrigerators, for example — as well as items that get cheaper over time, the increase in Social Security checks coming in January may not be sufficient to cover the rising cost of everyday goods,” said Steven Cunningham, director of research and education for the AIER. “Seniors who rely on their Social Security checks to cover everyday expenses — food, utilities, gasoline and medical care — may find that a 2013 increase of 1.5% to 1.7% will fail to keep pace with rising prices,” he said. [email protected] Twitter: @mbfretirepro