Thursday, October 15, 2015

The Screwing of the Average American Retiree: No Social Security Cost-of-Living Increase in 2016

Americans who collect Social Security won't get an increase in their monthly checks in 2016, the Social Security Administration has announced. 

Annual increases in Social Security are made every year based on changes in a component of the consumer price index known as CPI-W (the Consumer Price Index for Urban Wage Earners and Clerical Workers). The index fell 0.4% in the period used by the government to calculate the annual increase in cost-of-living adjustment.

The CPI-W was pushed down mainly because of a fall in gasoline costs. However, seniors tend to drive less and not save as much because of cheaper gas.

What is important for seniors is food costs and those climbed throughout the period at a rate of 1.57%.




The extra benefits normally kick in on Jan. 1. Social Security recipients got a 1.7% cost-of-living adjustment in 2015, 1.5% in 2014 and 1.7% in 2013. The last time there was no increase was in 2010 and 2011.

Prior to 1975, Social Security benefit increases were set by legislation. Below are the annual adjustments since then.

Social Security Cost-Of-Living Adjustments
YearCOLA
19758.0
19766.4
19775.9
19786.5
19799.9
198014.3
198111.2
19827.4
19833.5
19843.5
19853.1
19861.3
19874.2
19884.0
19894.7
YearCOLA
19905.4
19913.7
19923.0
19932.6
19942.8
19952.6
19962.9
19972.1
19981.3
1999  a2.5
20003.5
20012.6
20021.4
20032.1
20042.7
YearCOLA
20054.1
20063.3
20072.3
20085.8
20090.0
20100.0
20113.6
20121.7
20131.5
20141.7
20150.0
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.
  -RW

4 comments:

  1. Sounds like they should have planned for their own retirement rather than relying on a third party to rob their children and grandchildren.

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  2. @Paul: that's true for social security and I tend to agree with you but don't forget how the Fed is F'ing seniors via ZIRP.

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  3. Not to defend SS, but after a lifetime of having half your income taxed away, your savings constantly devalued by inflation, the value of your home and retirement accounts violently whipsawing as periodic bubbles turn into crashes, and your career goals derailed by the business cycle, I can see why SS is so politically popular. It simply won't be going anywhere as long as the United States remains a viable entity.

    Of course, this begs the question 'what happens when it runs out of money' but I don't think that's hard to answer, particularly in light of Bernie's campaign. The people who saved privately and made plans to not depend on SS will fund those who didn't.

    It's easy to envision a law being passed where you can't draw SS or Medicare if you have more than say $250k in non-home assets. You'll draw down your own personal wealth while others enjoy their SS bennies in full. As 401k money hasn't been taxed, it's also easy to envision a special 'excess retirement income' tax that further takes from the prudent. The tax could be applied to non-retirement financial assets too.

    This in my mind is the real 'doomsday' scenario - a massive redistribution of retirement assets, not a collapse of the SS system.

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  4. This also effect federal employees, I have seen the cost of food go up about 15% in the passed year. Years ago the CPI never used the price of gas as a index, but now that are, WHY???

    ReplyDelete