No Social Security Increase for 2010

Social Security payments will not have a Cost Of Living Adjustment (COLA) this year. But this is no need to panic - it isn't a problem!!!

The COLA was set up to increase each year by the same percentage as the inflation rate. If prices went up by 5%, then your SS check would also go up by 5%. This gives the recipient the same purchasing power from year to year.

This year the inflation rate is a negative - overall prices declined over the last 12 months. This because in the face of recession, prices fall as companies try to reduce inventories & retain precious customers.

So, with prices not going up, SS checks will not go up. But, at least the checks will not drop. For the last year, SS recipients were better off, because of the lower prices. For a while going forward, they may continue to see these gains even though the size of their checks didn't go up.

As the economy gets into recovery mode, prices will start to climb. Hopefully, the increase in prices near the end of the year will be off-set by the lower prices at the beginning of the year (and last year as well), and everyone will be all right. This should be the case unless inflation jumps up to 7-8%. Then next year the next COLA will come along, and there is no pain.