Food Stamp Cuts Devalues Recent Social Security Benefit Increase

Although many of the Social Security Benefit recipients were delighted with the recent increase in Cost-of-living Adjustment (COLA), some of them remain mum as the food stamp cut devalues the recent benefit raise.

Last month, the Social Security Administration (SSA) has officially announced that the automatic annual COLA increase for 2014 will be 1.5 percent. The said raise is supposedly enough for the increasing consumer prices.

However, just a few weeks following the federal benefit increase announcement, the food stamp cut has already begun to take effect.

This is some sort of a bit of bad news for the households that receive both social security benefits and food stamps at the same time. As the benefit increase take into effect by January 1, those who receive $1,000 in social security benefit and $228 in food stamps will receive a additional $15 in social security benefits while their food stamp have already went down by $20.

Obviously, the higher cut in food stamp makes the federal benefit increase worthless.

Based on recent statistics, about 17 percent or roughly 18 million Americans who rely in the Supplemental Nutrition Assistance Program receive Social Security income.

The national food stamp came in light after the 13.6 percent benefit increase contained in the 2009 stimulus bill had expired. Previous reports have it that the said raise wasn’t supposed to expire if the Congressional Democrats did not use the allocated money to pay for other spending priorities in 2010. Although, they pledged to replace the funds, their promises were later proved futile.

Meanwhile, several financial experts warned against the people’s common perception that the Social Security’s automatic annual cost-of-living adjustment is an increase in benefits.

"The COLA isn't a real increase, it's just an increase to keep the benefit up to date with inflation, whereas the cut that's taking place in SNAP benefits is actually a cut in real terms," said Paul Van de Water of the Center on Budget and Policy Priorities, a liberal Washington-based think tank.

Subsequently, in Los Angeles wherein a lot of retirees and disabled Americans rely on social security, many social security claim lawyers likewise believe the same.

“This year’s benefit raise is actually one of the lowest adjustments in decades mainly because the consumer prices in previous years haven’t gone up much,” claimed by a lawyer herein.

SSA Finally Announces Social Security Benefit Increase for 2014

Image gives credit to © BRADLEY C BOWER/AP/Corbis.

After various rumors and speculations regarding the automatic social security benefit increase for next year, the Social Security Administration has finally announced the exact amount of the said federal benefit in its official web page.

In its press release, the agency has confirmed that the automatic cost-of-living adjustment (COLA) increase in 2014 will be 1.5 percent. 

By January 2014, approximately 57 million Social Security Benefit recipients will start enjoying the raise while some 8 million Supplemental Security Income (SSI) beneficiaries will start to receive the increased payments by December 31, 2013, the agency announced. 

The annual automatic increase was adopted long ago for the purpose of keeping up the recipient’s income with the constantly increasing consumer prices.

Moreover, the agency also noted that some other changes that will take effect in January every year are based on the increase in average wages.

Just before the agency officially announced the exact amount of the automatic annual increase, many analyst and economist here in Los Angeles speculated that the increase is likely to be only 1.5 percent. In fact, this is one of the lowest in the previous decades.

“Apparently, analysts have got it right. This is most probably due to the fact that consumer prices haven’t gone up much this year and the recent years as monitored by the federal government,” said by a long term disability lawyer.

How Social Security Increase Should Be Estimated?

After news about the rumored social security increase for this year emerged, economist and even the recipients, have mulled over the projected minimal increase that reflects recent years’ low inflation rate amid poor economic growth.

Previous news have it that the automatic annual Social Security Cost-of-living Allowance (COLA) increase is likely to be at  1.5 percent only based on the economists’ estimates.

Meanwhile, everyone is still waiting for the official announcement from the federal government. Therefore, the exact amount of COLA increase is still unknown.

Generally, the automatic annual increase calculation is being based on the yearly consumer price index (CPI). However, due to the recent government shutdown, the Labor Department’s report regarding inflation for this year has been delayed. Usually, the said report is being released by October to give the federal benefit program ample time to adapt with the new payment scheme by January. Thus, recipients may be able to enjoy the increase as soon as the fiscal year starts.

If the economists got it right that this year’s increase will be only about 1.5 percent, then that could be one of the lowest increases over decades.

Thus, many economists contest that the standard CPI is not the best way to track how social security recipients, particularly retirees spend. As for them, the CPI is not designed to reflect what senior and disabled recipients are actually spending. Apparently, the same mostly covers what wage earners are paying.

Among seniors, health care and medicines account for a bigger share of their spending. Each year, prices for medical-care services increase by 3.1 percent, exhibiting a much faster pace than overall prices. Transportation and education on the other hand only account for a smaller share of their expenditures.

Economists believe that a better gauge for computing the automatic COLA increase is the Labor Department’s “Experimental CPI for Americans 62 Years of Age and Older”.

One economist explained that the experimental CPI would give a rate of inflation that is 0.1 to 0.2 percentage higher that the standard CPI this year. A social security disability firm, serving greater Los Angeles likewise shares the same belief

However, that is not always the case according to another economist. During the previous decade, there were instances where in the broader index is higher, in others, the experimental index is the higher one.