Social Security recipients will receive a cost of living adjustment (COLA) of 3.6 percent beginning in 2012 — the first increase since 2009 — but it won’t go far enough, says Merton C. Bernstein, LLB, a nationally recognized expert on Social Security.

“COLA is welcome but will not fully maintain beneficiary purchasing power,” says Bernstein, the Walter D. Coles Professor Emeritus at the Washington University in St. Louis School of Law.

Bernstein

“The formula setting that rate does not meet fully the needs of Social Security recipients, especially when considering medical costs.”

Bernstein says that the formula understates the impact of health care costs that are heavier for seniors and the disabled and surviving family members who often are not employed and lack health insurance.

“At the same time, private retirement plans do not begin to match Social Security COLA,” he says.

“State and local employee retirement plans either lack such a feature or they do not seek to offset inflation in its entirety. These plans often reduce whatever COLA they have when economic times get tough – just when it is most important.”