2018 Cost of Living Adjustment
The Cost-Of-Living Adjustment (COLA) was enacted in 1972 and is collected by the Bureau of Labor Statistics in the Department of Labor. The measurement used to do these calculations is known as the Consumer Price Index (CPI), which is an economic indicator that overlooks the cost of consumer goods and services such as: housing, transportation, medical expenses, education, and food.
The calculations are taken monthly from the previous year’s 3rd quarter to the current year’s 3rd quarter and are then averaged to get the years overall total. Back in October, it was announced that from 2016 to 2017, there was an increase of 2%.
What does this mean for Social Security Benefits?
The Consumer Price Index for Urban Wage earners (CPI-W), a slight variation of the CPI, is defined as members in the population who have been employed for 37 weeks or more. The Social Security Administration uses the CPI-W COLA to annually adjust benefits paid to Social Security beneficiaries and supplemental security income recipients
To help stay in line with these rising prices and the cost-of-living, Social Security Benefits typically increase to match the COLA, and as of 2018, beneficiaries will receive a 2% increase in Social Security Income (SSI). This calculation is a big jump from the 0.3% in 2016 and the 0% in 2015.
There are over 66 million Americans who will be affected by this, and increases to the recipient’s Social Security Income (SSI) are set to be implemented as early as December 29th, 2017.*
a 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. (Image from SSA)
*Sources: The Social Security Administration