The Lowest COLA Increase Since 1975
Associated Press (AP) reports that the Cost-Of-Living (COLA) increase for this year will be about 1.5%. The amount of this increase is the same as last year and about the lowest automatic increase since 1975. The exact amount of next year’s increase will not be known until the U.S. Department of Labor releases their inflation report. In general, next year’s raise is small because consumer prices, as measured by the government, have not increased very much. According to AP the average monthly Social Security benefit is $1,162. A 1.5 percent increase will be about $17.
People who retire early are especially hit by the small raise. Early retirees permanently receive a reduced benefit. The decreased benefit affects the amount of the annual Cost-Of-Living Adjustment (COLA) increase. For example, if the COLA is 1.5 percent and the monthly benefit is $1,000, the amount of the COLA increase is $1,000 X .015 = $15. In contrast, someone with a $750 benefit would receive $22.50 ($750 X .015 = $11.25). The increased monthly payment amount becomes the new basis for the next COLA increase.
Note: In the past the COLA was often 3 percent or $30 a month increase for someone with a $1,000 benefit.
|Claimants receive annual Cost-Of-Living increases based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. COLAs ensure that benefits keep up with inflation. For more information see www.ssa.gov/OACT/STATS/cpiw.html.|