Will Your Social Security Check Be Too Low?

Aug. 14, 2009— -- Whether you're talking bus tickets or bags of groceries, prices for goods purchased on a daily basis are staying about the same -- or even dropping.

As expected, the monthly Consumer Price Index, reported by the government this morning was zero for the month of July. In comparison to a year ago, the CPI dropped 2.1 percent.

For most consumers, that's good news, but for the some 30 million senior citizens who receive Social Security benefits, this trend comes with a big downside: It means that their Social Security checks, which are pegged to the CPI, likely won't increase next year.

It's especially a problem for senior citizens such as Sylvia Schneider, 80, of New York City, who says her monthly Social Security check is her primary form of income. The average monthly benefit is just over $1,050 this year, according to the Social Security Administration.

"The government has a right not to increase it. I understand that," Schneider said. But, she added, she's still worried about making ends meet.

Escalating health care costs are sure to keep making times tight for the country's older population, said Cristina Martin Firvida, director of economic security for AARP.

"It is no question that it will be a hardship for individuals who are going to continue to see an increase in their out-of-pocket health care expenses to not have a cost-of-living increase in Social Security," Firvida said.

Last year, when food and energy costs were squeezing wallets across the country, seniors saw a jump in benefits. Social Security Administration increased payments by 5.8 percent.

Not so this year. In April, the Congressional Budget Office predicted that by September, price changes would be small enough to head off any increase in Social Security benefits.

Government reports on the CPI since then, including today's, seem to indicate that that forecast will likely soon become reality, with all of this year's monthly increases falling below 1 percent.

If the monthly increases stay low for the next three months, experts say, then Social Security benefits definitely won't rise in 2010 -- an unprecedented event.

The official benefits announcement will be made in October.