Social Security benefits for the nation's 50 million seniors will rise 5.8 percent in January, providing the biggest cost-of-living increase in more than 25 years at a time when the nation's elderly are being buffeted by rising fuel and food costs and a weak stock market.
The typical retiree will get about $63 more a month, the Social Security Administration announced yesterday. About 786,407 Marylanders received an average of $1,090 in monthly Social Security benefits as of January 2007, according to the Social Security Administration.
The sharp rise comes after several years of lower cost-of-living adjustments and as retirees are seeing their investments battered in the stock market. This month, the Congressional Budget Office estimated that Americans' retirement plans have lost as much as $2 trillion over the past 15 months - more than 20 percent of their value - because of the market downturn.
"With the continuing increases in the cost of gas and energy and health care and food, it doesn't completely ease their burden, but every dollar counts and it's certainly a very welcome increase," said Tiffany Lundquist, a spokeswoman for AARP Maryland.
Floyd Turner's eyes widened when he heard about the increase. It's about time, he said.
"What was it last year, 2.5 percent?" asked Turner, 76, who lives at Westminster House, a senior housing facility in Mount Vernon, and calls its weekly bingo games. Turner said the boost would help him cover a recent $35-a-month rent increase. Otherwise, he didn't foresee a lavish lifestyle.
"It ain't gonna be steaks every night," he said. "Maybe a beer on Friday."
The annual cost-of-living adjustments, which started in the 1970s, are tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers, a measure of inflation calculated by the federal Bureau of Labor Statistics.
"The general idea is to make sure people's benefits don't get eroded by the cost of food and health care and energy prices and stuff like that," said Edward Montgomery, an economist and dean of the University of Maryland's College of Behavioral and Social Sciences.
This was the worst third quarter since 1982, Montgomery said. That year, the cost-of-living increase was 7.2 percent.
He said this year's increase was primarily driven by rising food and energy costs.
