COLA Adjustment for 2016
Posted by Credit Monarch on October 20th, 2015
Social Security Administration announces: No increase in SS Benefits for the year 2016
The Social Security Administration announced (Thursday Oct 15) that there will be no cost of living adjustment (COLA) in 2016. This means that more then 65 million Americans, living on social security benefits will not see an increase in SS benefits for 2016. The expected yearly increase in SS benefits is derived from an increase in the cost of living. The cost of living is calculated according to the CPI-W (consumer price index) and the CPI-W is determined by the Bureau of Labor Statistics in the Department of Labor. The law states that if there is no increase in CPI-W then there will be no COLA.
2016 Brings You – A Diet for the COLA
To put in the simplest words, this means that if the market price for consumed goods (gas, bred, milk, rice, tobacco, alcohol etc) goes up in 2015 according to the CPI-W, then social security benefits will go up as well. This yearly change happens automatically and does not require a committee or any decision making process.
Since there was no increase in CPI-W between the 3rd quarter of 2014 and the 3rd quarter of 2015 then there will be no COLA in 2016. In reality the CPI-W has shown a decrease in consumer prices which should have triggered a decrease in SS benefits. However the law states the SS benefits can not decrease.
What this means for SS beneficiaries in 2016 is that SS & SSI checks will remain the same as last year. In theory, this should not bring panic to any beneficiary since it reflects the actual costs of living which haven’t changed. However, many argues that the CPI-W does not reflect the way that most beneficiaries and especially the elder spend their money thus not reflecting their true cost of living. For example, if the COLA is largely affected by the fluctuations in gas prices or consumer’s electronics, certain demographic adjustments should also take place. Meaning, since older people consume little or no gasoline compared to other segments of the population then their cost of living should not be appraised by this variable. Same apply to consumer electronics; older people simply don’t buy as many computers, tablets, smart phones etc, and a price drop in these goods, should not reflect their cost of living.
Final thoughts: The Social Security Administration is one of the most important agency’s in the US welfare system.
We cant deny the nobility of the fundamental concept of the SSA — helping the weaker population.
The SSA constantly improved their services and increased their budget along the years serving close to 70 million Americans today.
We hope that this article somewhat simplified this topic, and perhaps even calmed down a few eager readers. We also hope this year will bring financial strength and growth to all.
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Social Security and Supplemental Security Income (SSI) benefit