Social Security Recipients to Get 2.8% Raise

America’s 45 million recipients of Social Security and Supplemental Security Income will get a 2.8% increase in benefits next year to keep up with inflation.

The Social Security Administration announced Friday that the average benefit for retired people would rise to $698 from $679, effective Jan. 3.

Maximum SSI payments--which go to poor people who are aged, blind or disabled--will climb to $458 from $446 for individuals, and to $687 from $669 for couples, effective Dec. 30.

The annual cost-of-living adjustments, which began in 1975, are designed to keep inflation from eroding the value of benefits.

“This latest increase ensures that Social Security will continue to provide inflation-adjusted economic security to millions of senior citizens who depend on it in their retirement years,” said Social Security Commissioner Shirley Sears Chater.

But because it reflects the overall increase in the inflation rate, the 1995 increase will be the third smallest in 20 years. For the last four years, prices have been rising at the lowest rates in three decades.

Only the benefits adjustments of 1.3% in 1987 and 2.6% last year are smaller than the 1995 increase. Benefits had shot up 14.3% in 1980 and 11.2% in 1981 when inflation was flaring.

The Labor Department reported Friday that the 0.2% increase in its September consumer price index meant prices were rising at a 2.8% annual rate for the 12 months ended Sept. 30. The Social Security and SSI adjustments are calculated each fall from the CPI increase during the previous four quarters.

The American Assn. of Retired Persons acknowledged that the adjustment permits many beneficiaries to keep up with inflation and remain financially secure.

“Unfortunately, this COLA (cost-of-living adjustment) will not be as much help for younger Americans with disabilities nor for many older Americans because this increase will not cover rising health care costs,” said Horace B. Deets, the association’s executive director.

“Health care costs for these populations routinely outstrip the COLA, with the price of many retail prescription drugs twice the COLA and overall health care costs more than triple the COLA.”

Deets also said the increase will be offset for many lower-income Medicare beneficiaries by a 12.2% increase in 1995 Medicare Part B premiums. The Medicare premium is taken directly out of a recipient’s monthly benefit check.

About 45 million Americans now receive benefits, including 42 million on Social Security rolls and 6 million on SSI. Some people are eligible for both, which accounts for the smaller overall total.