WASHINGTON -- In a yearly ritual that dates back more than three decades, nearly 49 million Americans will be getting a little something extra in their Social Security checks come January. The typical retiree will see an additional $33 per month, an amount designed to help offset the effects of rising inflation for people on fixed incomes.
The latest cost of living adjustment, or COLA, was disclosed by the Social Security Administration yesterday and will start showing up in monthly Social Security benefit payments in January.
The average retiree benefit of $1,011 a month will climb to $1,044 next year.
The cost of living adjustment goes to more than 53 million people. Nearly 49 million of them receive Social Security benefits while the rest get Supplemental Security Income payments aimed at the poor.
The 3.3 percent increase compares with a 4.1 percent benefit rise in for 2006, which had been the biggest increase in 15 years.
Benefit payments have been tied to inflation since 1975. Those increases surged in the early years of the program as the country was beset with double-digit inflation in the late 1970s and early 1980s.
But the increases have been more moderate in recent years as the Federal Reserve has had more success in keeping inflation under control.
The COLA amount is based on the change in the consumer price index from the July-September quarter of this year compared with the same quarter in 2005.
Last year, prices surged in September, reflecting a big spike in energy costs after Hurricane Katrina. But this year, energy prices, which initially leaped because of rising Mideast tensions, have been falling since late summer. Those declines helped pull consumer prices down 0.5 percent in September, the biggest drop in 10 months.
The average retired couple, both receiving Social Security benefits, will see their monthly check go from $1,658 to $1,713.
The average monthly check for a disabled worker will rise from $947 to $979.
Part of the 2007 gain will be eaten up by a $5 increase in the payments retirees must make for Medicare Part B insurance, which pays for doctors' visits and other outpatient care.