The Social Security Administration (SSA) recently announced that it would be passing along a roughly two percent Cost-Of-Living Adjustment (COLA) to about 60 plus million Social Security recipients next year. While two percent may seem a bit modest, it is fortunately the largest such increase in benefits over the last five years. I guess you could say it is better than nothing, which was exactly what the COLA was in 2009, 2010 and 2015. The 2018 figure will be the largest increase since 2011’s 3.6% and 2008’s 5.8% respectively.
Since 2010 (including 2018’s number), the COLA has averaged about 1.2 percent a year. For what it’s worth, the preceding decade (2000-2009) averaged about 3.0 percent, slightly less than 1990-1999’s 3.1 percent.
The SSA computes its COLA based on the Bureau of Labor Statistics (BLS Consumer Price Index (CPI) from the third quarter of 2016 through the third quarter of 2017. The CPI is a measure by the BLS of the monthly changes in the prices paid by consumers for something it calls a “basket of goods.” These items can include transportation costs, food, clothing, furniture, services and so on. In other words, a basket of goods comprises just about everything you purchase.
So what does this new increase amount to in practical terms? Broadly speaking, the average benefit paid to all retired workers will increase from $1,377 to $1,404, or by $27. The average benefit paid to all disabled workers will increase from $1,173 to $1,197, or by $24. Again, these are average figures; there will be some categories of recipients who will gain a little more or a little less than these numbers.
There is a bit of a twist though; if Medicare premiums are increased — which is a very real possibility and another blog topic altogether for the future — they would effectively negate the gain. Ah well…you take the good with the bad.
If you or your child have been denied SSA disability benefits or suffer from a severe impairment that is expected to last more than twelve months and that prevents you from doing any of your past or other work or is causing developmental delay in your child, please contact our office nearest to you to set up a free consultation appointment to discuss your situation.