Social Security checks to rise little

The 46 million Social Security recipients will get the smallest increase in their benefit checks in four years come January, a 1.4 percent rise that translates to just $13 a month more for the typical retiree.

About one-third of that will be eaten up by an increase in monthly Medicare premiums.

The announcement of Social Security's modest cost-of-living adjustment, coupled with word that monthly Medicare premiums next year will go up by $4.70 to $58.70, left many retirees worried Friday about how they will pay their bills.

Many already were in severe trouble because declines in stock prices this year have wiped out trillions of dollars in investments.

"Some of our friends, they've seen their 401(k) accounts lose over 50 percent, and now they're concerned whether they can stay retired," said Ellen Long, 74, a former math and reading tutor in Fort Collins, Colo. "Right now, we're holding our breath."

Ray Owens, a former church administrator in Columbia, S.C., said he and his wife decided to retire early this year and had hoped to use their investments to supplement their Social Security earnings.

"Of course, right after that all hell broke loose, and the stock plummets," said Owens, 67, who has had to cash in some of his investments to meet expenses. "We're having to dig into the golden goose."

Medical, stock squeeze

Advocacy groups for older Americans said retirees were being caught in a squeeze between retirement savings plummeting because of the falling stock market and medical costs continuing to soar. That problem is made worse by Congress' failure to pass legislation this year that would have added drug coverage to Medicare.

"For millions of people without drug coverage, this 1.4 percent cost-of-living increase is not going to even come close to the soaring cost of prescription drugs they are facing," said David Certner, director of federal affairs for AARP, formerly known as the American Association of Retired Persons.

The 8.7 percent increase in monthly Medicare premiums is mandated by Congress so that premiums will cover 25 percent of the cost of the health-care program for the elderly. Those premiums were set at $3 a month when Medicare began in 1967.

Social Security's 1.4 percent cost-of-living increase, which also will go to 7 million recipients of Supplemental Security Income, the government's cash assistance program for the poor, is the smallest since a 1.3 percent rise in 1999. This year's benefits boost was 2.6 percent, and in 2001 it was 3.5 percent, the biggest rise in nine years.

The country's first recession in a decade last year and this year's stop-and-go recovery have combined to keep the lid on inflation, which means a smaller cost-of-living adjustment for government benefits.