Retirement Blog

Finance Blogs » Retirement Blog » Social Security COLA no big deal

Social Security COLA no big deal

By Jennie L. Phipps ·
Tuesday, September 25, 2012
Posted: 5 pm ET

If you're doing some 2013 retirement planning you can probably safely factor in a Social Security retirement pay raise of 1.3 percent.

The official Social Security cost of living adjustment for 2013 will be announced in mid-October, but the Congressional Budget Office has already made its guesstimate without the final figures from September and predicts 1.3 percent.

That's a puny -- but automatic -- raise for Social Security recipients as well as those who receive federal and military pensions.

This estimate came Sept. 18 because the U.S. is debating whether to approve a bill that would increase veterans' disability and survivors benefits by the same COLA that other military, federal retirees and Social Security recipients get. The House of Representatives already passed the bill in July. The CBO concluded that at 1.3 percent, the increased cost of giving disabled veterans and their surviving spouses a raise would be $686 million in fiscal year 2013. When you think about a debt in the trillions, that sum doesn't look as mind-boggling.

The COLA adjustment is effective Dec. 1, and will show up in recipients' checks in January.

What are you going to do with that money? For one thing, you are likely to spend it on Medicare's Part D Prescription Drug plan. Seven of the top 10 prescription drug plans have scheduled increases of 11 percent or more, according to an analysis by Avalere Health of the Centers for Medicare and Medicaid Service Part D Landscape Files.

The Humana Walmart Preferred RX Plan is upping its charge the most. Its premium is going up 23 percent to $18.50 per month (which is still cheaper than most others). First Health Part D Premier, First Health Part D Value Plus and Cigna Medicare Rx Plan One each raised premiums by at least 15 percent. Overall, Part D premiums for current plans increased on average by 6 percent from 2012 to 2013, and the average monthly premium rose from about $38 to $40.

Medicare open enrollment starts Oct. 15 and runs through Dec. 7.  This is the time when you can switch plans. Avalere suggests you check out United Health's new Medicare Rx Saver Plus PDP, which costs as little as $15 a month -- the lowest-cost plan available in many parts of the country.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
September 29, 2012 at 11:08 pm

Just remember, if Obama is re-elected all seniors who can work, will have no choice but to join the work force again. Those that can't, well to bad. All seniors better wake up and smell the roses. He is a fast talker, he has not delivered on anything. I don't know many seniors who can afford our dollar's value slipping more. Don't ever think he really cares about us, just look at his record.

September 29, 2012 at 11:07 am

I am pleased that the COLA is going up - not enough but up. Remember that for the first several years of Obama's tenure, it was frozen- Gas for my car is the big issue. It is getting to the point that I have to stay home when the tank gets low until my next ss check arrives. 1.3 percent is about 19.50 more a month if you were getting 1500.00.

September 29, 2012 at 9:48 am

Entitlement? Yes, I am entitled, I worked for over 30 years and paid dearly into Medicare and Social Security. If the Government would cease the ever growing "unentitlements" then maybe the people that actually worked and paid into the system would get what they deserve. People that snear at "entitlements" do not realize that they too will one day be on SS Retirement/Disability. Will they be so snide about no or small increases in THEIR retirement checks??? Young people do not realize just how expensive drugs are and we still have to eat, drive, the same things that working people do. Be snide all you want, believe me, it will come back to bite you in the rear!

September 29, 2012 at 9:15 am

To Eric - When have we Seniors ever received a 10% increase?Never! They can get the money to give SS Recipients the same place as our people in Washington get theirs. Then they have the gaul to take a huge retirement figure when they expect us tp live on peanuts.

Jo C
September 29, 2012 at 6:54 am

Linda, why would anyone think that SS would be enough to live on in retirement. It is not the "Government" sticking it to you - they don't have any money. They take it from those currently working to give it to you. Do the math, with today's expected age longevity most recipients will pull out more money than they have contributed. My husband and I are both on SS, I'm 68 and he is 79. We both still work - SS is not enough to live on. Oh and we also have 401K's that we are contriubuting to so our SS is supplemented when we can no longer work. Go to a SS Office and you will see another problem with who is in line.

September 28, 2012 at 12:24 pm

obmaaaa care don't you just love it ?????????? you are paying for all the free care

September 26, 2012 at 11:46 pm

IF people on SS/SSDI get a 1.3% COLA, remember that Medicare is going up in January too. Doing a quick estimate, that means as a disabled person I will have a whopping $8 more a month. Medicare Advantage HMO that I've had since before Part D has gone from $30 (with prescription coverage) to $110 when Part D kicked in along with beginning of the year deductible, donut hole, medications no longer covered, higher co-pays for everything. Oh and that same HMO is going up in 2013 from $155 to $171 a month. Did I plan on losing everything (retirement/savings) to survive on while waiting for SSDI? NO. I do not have family, I am on my own barely making it. I worked HARD starting when I was 15 until I became disabled. Yeah, I'd really rather be scratching by on SSDI than what I was making when I was working ... NOT. ACA plans to close the donut hole, but does nothing for the $280 beginning of the year prescription deductible, people on Medicare are not eligible for state exchanges, straight Medicare co-pays for doctors and tests are out of this world - if you can find a doctor/hospital to take straight Medicare. I don't know what disabled/seniors are supposed to do. I guess we truly are disposable.

September 26, 2012 at 10:18 am

Yup, Linda, the government stuck it to you. 10% inflation? Are you nuts? No one in the private sector gets 10% raises every year, yet we get by. Where do you propose we get the money to give every senior a 10% raise every year?

Too many people looking for entitlements. You likely paid into SS about 40 cents on the dollar on what you will get out, leaving it to your kids and grandkids to make up the rest. And then you want more. Ungrateful.

September 26, 2012 at 8:54 am

What are you doing throwing money away on a lease when you're collecting SS? You can't willfully waste money and then complain you have none.

Linda P
September 25, 2012 at 7:15 pm

Why bother? Since I've had SS I've never had the 10% needed to try and keep up with inflation. What do we cut now - utilities, food, Rx's, gas for cars? I'm glad my car lease is up in a couple months - I'm seriouly thinking of doing without a car and its payment and insurance. My feet or a cab can take me where I want to go. Government just sticks it to us one more time!