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Social Security COLA in 2012?

By Jennie L. Phipps · Bankrate.com
Saturday, September 17, 2011
Posted: 9 am ET

It looks like there will be a Social Security cost of living adjustment, or COLA, in 2012 -- positive retirement planning news for many.

Bill McBride, a retired financial executive, blogs at CalculatedRiskBlog.com about economic trends. On Friday, he calculated the early line on Social Security COLAs and concluded that based on Friday's report from the Bureau of Labor Statistics saying that "The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 4.3 percent over the last 12 months," the Social Security COLA will be 3.5 percent in 2012.

McBride pointed out that Medicare premiums are also tied to this calculation and will rise as well, so some of that small retirement windfall is already spoken for.

He calculated that the contribution base cap is like to rise from $106,800 to somewhere around $110,000, although it's possible that if wages remain flat, there will be no increase, he said.

In a related post, he contemplated a switch to the chained Consumer Price Index, or CPI, from the CPI-W. The chained CPI is one of the most likely to be adopted in Social Security cost-saving scenarios. McBride said that if the government had adopted the chained CPI 10 years ago, Social Security benefits would be about 3.6 percent lower than they are now.

That doesn't sound terribly drastic, although it would certainly add to the pain for the 25 percent of recipients who are dependent solely on Social Security.

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26 Comments
trudy#36
October 19, 2011 at 3:30 pm

I AM SURE EVERYONE IS GREATFUL FOR THE INCREASE BUT LETS GIVE THANKS TO THE ALMIGHTY GOD WHO SUPPLIES ALL OUR NEEDS.CAN I GET AN AMEN?.

megan
October 18, 2011 at 4:47 pm

Bob I am also disabled. I depend on my social security also.
I think I depend on the increase in reality and not
necessary God. Megan

Terri
October 17, 2011 at 3:17 pm

God will make sure the people who worked all their lives and earned the 2012 cost of living adjustment will receive it He is the only one who really knows how hard it is to live off the only income most of us have and that is social security. So have faith we will get one this year.

Bob
October 17, 2011 at 2:32 pm

It's good to know that God is in control of all our problems, and he's sure testing those of us who rely on Social Security Disablity with no other means of support, but I guess the good Lord is just checking to see that His axiom that that which doesn't kill us can only make us stronger. With my medical supplemental premiums constantly rising, I'm going to make Swartzenegger look like a wimp back in his golden days, or maybe Ill get lucky and fall living alone in my apartment and bite the big one, and the whole arguement will be moot.

Ray
October 15, 2011 at 10:23 am

Let God be in control of all our problems, he is a fix it man not that bunch in Washington.