2% BOOST FOR SOCIAL SECURITY

COLA is largest since 2012 but averages about $25 a month

Increase in benefits next year is the largest since 2012 but comes to only $25 a month for the average beneficiary.

WASHINGTON — Millions of Social Security recipients and other retirees will get a 2 percent increase in benefits next year. It’s the largest increase since 2012 but comes to only $25 a month for the average beneficiary.

The Social Security Administration announced the cost--of-living increase Friday.

The COLA affects benefits for more than 70 million U.S. residents, including Social Security recipients, disabled veterans and federal retirees. That’s about one in five Americans.

By law, the COLA is based on a broad measure of consumer prices generated by the Bureau of Labor Statistics. Advocates for seniors claim the inflation index doesn’t accurately capture rising prices faced by seniors, especially for health care.

“It’s squeezing them. It’s causing them to dip into savings more quickly,” said Mary Johnson of The Senior Citizens League. “The lifetime income that they were counting on just isn’t there.”

Some conservatives argue that the inflation index is too generous because when prices go up, people change their buying habits and buy cheaper alternatives.

Consumer prices went up only slightly in the past year despite a recent spike in gasoline prices after a series of hurricanes slowed oil production in the Gulf Coast, said Max Gulker, senior research fellow at the American Institute for Economic Research.

The average monthly Social Security payment is $1,258, or about $15,000 a year.

Over the past eight years, the annual COLA has averaged just above 1 percent. In the previous decade, it averaged 3 percent.

Johnson noted that multiple years of small or no COLA’s reduces the income of retirees for the rest of their lives.