Friday, October 2, 2015

No Social Security COLA Adjustments for 2016

Unless something really wacky happened to cost-of-living in September that I don’t know about, Social Security recipients will not receive cost-of-living benefit increases for 2016.

Here’s the math:

The benefit increases only occur if the average CPI-W for July, August and September exceeds that for the highest previous average for the same months (which occurred in 2014). In 2014 the three CPI-Ws were

234.525 for July 
234.030 for August 
234.170 for September

702.725 total for the three months (average 234.242)

In 2015 we already have:

233.806 for July 
233.366 for August

Meaning that to equal the 2014 total of 702.725, we’d need September to come in at 235.553. However, the cost of living adjustments occur only in 0.1% increments, which means a small increase in the average won’t trigger a COLA adjustment. It has to minimally round up to 0.1% and that requires the total to be at least 703.077. September’s CPI-W must come in no less than 235.905 to trigger a COLA adjustment, and to do that cost-of-living must have jumped over 1% in September!

The CPI-W is not seasonally adjusted, so it is more volatile than some other measures of cost-of-living, but a 1% jump did not happen in a month when gasoline prices continued to decline.

We’ll know for sure on October 15 at 8:30 A.M. Eastern Time, but the bottom line is: No Social Security COLA adjustments for 2016.

~ Jim

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