The Social Security program turned 75 years old in 2010, and has provided billions of dollars to senior citizens through the years. But unless Congress acts, Social Security is projected to run out of money by 2037. Get the latest news on attempts to modify Social Security and updates on the general solvency of the program.
In 2011, More than 58 million retirees and disabled Americans will get no increase in Social Security benefits, the second year in a row without a raise.
The Social Security Administration said Friday inflation has been too low since the last increase in 2009 to warrant an increase for 2011. The announcement marks only the second year without an increase since automatic adjustments for inflation were adopted in 1975. The first year was this year.
The cost-of-living adjustments, or COLAs, are automatically set each year by an inflation measure that was adopted by Congress back in the 1970s.
To make up for the lack of a COLA, the House will vote in November - after congressional elections - on a bill to provide $250 payments to Social Security recipients, House Speaker Nancy Pelosi said. But even if Pelosi can get the House to pass the proposal, it faces opposition in the Senate.
The absence of inflation will be of small comfort to many older Americans whose savings and home values still haven't recovered from the recession. Many haven't had a raise since January 2009, and they won't be getting one until at least January 2012. And the timing couldn't be worse for Democrats as they approach an election in which they are in danger of losing their House majority and possibly their Senate majority as well.
Social Security is supported by a 6.2 percent payroll tax - paid by both workers and employers - on wages up to $106,800. Because there is no COLA, that amount will remain unchanged for 2011.
The last increase in benefits came in 2009, when payments went up by 5.8 percent, the largest increase in 27 years. The big increase was caused by a sharp but short-lived spike in energy prices in 2008.