Social Security COLA: 2012 Will See an Increase
For the last 3 years Senior Citizens have seen no increase in their Social Security benefits. The last Cost of Living Adjustment (COLA) was in 2009 and increased benefits by 5.8%. This October the Social Security Administration is expected to announce a small increase in benefits that will take effect in 2012. The increase will be small as it loosely follows the Consumer Price Index which has not seen large increases as inflation has remained low. Some have speculated that the increase will remain under 2%.
COLA has been a part of Social Security since 1975 allowing for seniors to have adjustments made to their monthly SS income to keep up with rising costs. There are nearly sixty three million retirees that will welcome any increase to help them buy food and pay utilities. Since the increase in 2008 seniors income has remained unchanged amidst the rising cost of living.
COLA is determined by the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers(CPI-W) from one year to the next. The 3rd quarter average of one year is compared to the next year. For example, the increase in 2002 for COLA was 2.6%. This was determined by looking at the CPI-W from the 3rd quarter of 2000 and comparing it to the 3rd quarter of 2001. 2003-2008 saw increases of 1.4%, 2.1%, 2.7%, 4.1%, 3.3%, and 2.3 respectively. 2010 and 2011 remained unchanged as there was no increase in the CPI-W. These are automatic changes based on the CPI-W. This year the CPI-W will be compared to the 2008 CPI-W and the COLA adjustment will vary accordingly.
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