Health & Fitness
Social Security COLA Adjustment
The Social Security Administration recently announced that they would be granting a 3.6% increase to all recipients beginning in January 2012.
It’s been two years since we’ve seen an increase in Social Security cost of living adjustments (COLA). But recently the Social Security Administration announced that they would be granting a 3.6% increase to all recipients beginning in January 2012. This will affect nearly 60 million social security recipients. See the announcement here by the Social Security Administration: http://www.ssa.gov/cola
The increase will mean $43 more each month for the typical retired worker, according to the Social Security Administration, bringing average monthly benefits to $1,229.
There is also considerable debate surrounding the COLA inflation measurements the government uses to calculate the annual adjustment. Some advocates believe that the calculation artificially lowers the “real” impact of inflation, especially on retirees that have been hit hard by a combination of lower real estate values, steep losses in retirement savings due to multiple market corrections that past 10 years, as well as staggering increases in health care and prescription drug costs. Meanwhile, certain lawmakers feel the government data actually overstates the actual inflation numbers.
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Below is a table of historical COLA adjustments:
Automatic Cost-Of-Living Adjustments
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July 1976 — 6.4%
July 1977 — 5.9%
July 1978 — 6.5%
July 1979 — 9.9%
July 1980 — 14.3%
July 1981 — 11.2%
July 1982 — 7.4%
January 1984 — 3.5%
January 1985 — 3.5%
January 1986 — 3.1%
January 1987 — 1.3%
January 1988 — 4.2%
January 1989 — 4.0%
January 1990 — 4.7%
January 1991 — 5.4%
January 1992 — 3.7%
January 1993 — 3.0%
January 1994 — 2.6% January 1995 — 2.8%
January 1996 — 2.6%
January 1997 — 2.9%
January 1998 — 2.1%
January 1999 — 1.3%
January 2000 — 2.5%(1)
January 2001 — 3.5%
January 2002 — 2.6%
January 2003 — 1.4%
January 2004 — 2.1%
January 2005 — 2.7%
January 2006 — 4.1%
January 2007 — 3.3%
January 2008 — 2.3%
January 2009 — 5.8%
January 2010 — 0.0%
January 2011 — 0.0%
January 2012 — 3.6%
(1) The COLA for December 1999 was originally determined as 2.4 percent based on CPIs published by the Bureau of Labor Statistics. Pursuant to Public Law 106-554, however, this COLA is effectively now 2.5 percent.
Robert C. Henderson is the President of Lansdowne Wealth Management in Mystic, CT. His firm specializes in financial planning and investment management for individuals approaching retirement or already in retirement, with a focus on the particular needs of women that are divorced or widowed. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.
