Marc: Thank you for that valuable news item. Brinker has often
opined that the current Consumer Price Index is not reflective
of the true buying habits and price resistance of consumers, and,
as such, overstates inflation. He has also irritated more than a
few senior callers by suggesting that Social Security recipients
have benefited mightily and in greater measure than any other
sector of the population in capturing the automated largesse
of an overstated(per Brinker and others) CPI. For those who may
be interested, the following is excepted from the SSA web page
outlining the history of COLAs and the historical explosion of
benefits paid by SSA through the years, an explosion indicative
of the transformation of a simple and exclusively worker based
post retirement(65) supplemental income plan to a full fledged
social insurance scheme for workers, spouses, and minor children.
With the prospect of 78 million odd baby boomers (born 1946-1964)
set to retire beginning anno Domini 2008, one can only imagine
the monstrous numbers, with respect to number of beneficiaries
and payout, awaiting tabulation only a few years hence.
"Gather ye rosebuds while ye may."
"The Story of COLAs
Most people are aware that there are annual increases in Social
Security benefits to offset the corrosive effects of inflation
on fixed incomes. These increases, now known as Cost of Living
Allowances (COLAs), are such an accepted feature of the program
that it is difficult to imagine a time when there were no COLAs.
But in fact, when Ida Mae Fuller received her first $22.54 benefit
payment in January of 1940, this would be the same amount she would
receive each month for the next 10 years. For Ida Mae Fuller, and
the millions of other Social Security beneficiaries like her, the
amount of that first benefit check was the amount they could expect
to receive for life. It was not until the 1950 Amendments that
Congress first legislated an increase in benefits.
Current beneficiaries had their payments recomputed and Ida May
Fuller, for example, saw her monthly check increase from $22.54
to $41.30. (These recomputations were effective for September
1950 and appeared for the first time in the October 1950 checks.)
A second increase was legislated for September 1952. Together
these two increases almost doubled the value of Social Security
benefits for existing beneficiaries. From that point on, benefits
were increased only when Congress enacted special legislation for
that purpose. In 1972 legislation the law was changed to provide,
beginning in 1975, for automatic annual cost-of-living allowances
(i.e., COLAs) based on the annual increase in consumer prices. No
longer do beneficiaries have to await a special act of Congress
to receive a benefit increase and no longer does inflation drain
value from Social Security benefits."
Social Security Benefit Increases 1950-1997
EFFECTIVE DATE PER CENT INCREASE
9/50 77.0
9/52 12.5
9/54 13.0
1/59 7.0
1/65 7.0
2/68 13.0
1/70 15.0
1/71 10.0
9/72 20.0
3/74* 7.0*
6/74 11.0
6/75 8.0
6/76 6.4
6/77 5.9
6/78 6.5
6/79 9.9
6/80 14.3
6/81 11.2
6/82 7.4
12/83 3.5
12/84 3.5
12/85 3.1
12/86 1.3
12/87 4.2
12/88 4.0
12/89 4.7
12/90 5.4
12/91 3.7
12/92 3.0
12/93 2.6
12/94 2.8
12/95 2.6
12/96 2.9
12/97 2.1
* The increase in 3/74 was a special, limited-duration increase.
It was effective for only 3/74-5/74. In June 1974, all payment
levels reverted to their 2/74 level, and the 11% increase was
permanently applied on this base.
Numbers of Beneficiaries
Social Security
Year Number
1937 53,236*
1938 213,670*
1939 174,839*
1940 222,000*
1950 3,477,000
1960 14,845,000
1970 26,229,000
1980 35,585,000
1990 39,832,000
1995 43,387,000
1996 43,736,000
*Recipients of one-time
lump sum payments.
Social Security Payments over the years
1937 $1,278,000
1938 $10,478,000
1939 $13,896,000
1940 $35,000,000
1950 $961,000,000
1960 $11,245,000,000
1970 $31,863,000,000
1980 $120,511,000,000
1990 $247,796,000,000
1995 $332,553,000,000
1996 $341,098,061,000
finis
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