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Social Security COLA in 2012?

By Jennie L. Phipps ·
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 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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Sam Johns
October 14, 2011 at 7:10 am

Also, all new and most current federal employees ARE essentially on SS for a large part of their retirement NOW. The FERS system was created in the 1980s and covers all new federal employees since that time. So this answers another comment here. Google FERS if you need to educate yourself before posting stuff that you obviously do not know about!!!

Sam Johns
October 14, 2011 at 7:05 am

No one who depends on social security benefits or supports ss should be voting Repug!!! Take Mr Cain's 999 plan - it would mean that the ss fund would be immediately broke with nothing coming in [it ends the payroll/FICA tax] so then ss benefits would be competing with all the other federal programs. The Repugs want to destroy ss; they opposed it all the way during its creation and all along the way as it evolved. Repugs talk about "saving ss" but don't believe this LIE! They want to destroy SS!!! I agree with others that the cap for ss tax should be removed so that everyone pays the full 6.2% into the system. And SS is NOT broke, it has solvency for several decades - its the waste in federal spending especially military spending that needs to be cut - the US spends as much on our military as ALL the other nations combined - ask yourself is this not overkill!!!!

October 11, 2011 at 7:58 pm


R Wayne
October 11, 2011 at 5:28 pm

Take the cap off of salaries and pay your FICA every year to the max. Much more money coming in. For those under 40 allow them to divert 1/4 of the money to a private account that can't be touched until you retire. This will give banks some working capital and give the payee some interest on part of the money. The democrats like to play fear games and the truth is that none of the changes would affect anyone over the age of 40 and would stop the ability of the Democrats always telling seniors that the Republicans are going to take their money. If you think the budget problems with SS are fun wait until they start playing games with Obamacare.

Jim Holmes
October 11, 2011 at 12:50 am

Don't vote for anyone that would kill Social Security.
The rich would rather kill SS and many politicians are rich.
The FIX for Social Security would be to not have a cutoff
for contributions at all. Right now I think it is around $108k
The rich are only rich at the expense of the poor as it is
only the desparity or degree differential that makes them rich.
Social Security is the best thing ever conceived for poor
American working people and our politicians would readily
take that from us to enhance their power over us but on
the other hand they wouldn't and don't hesitate a minute to give our money to our foreign enemies just to show us who is boss. I am thinking that Ron Paul may be our best bet. We need to quit sending our jobs and money overseas to please stockholders
of offshore companies. I really don't know what to do since
it seems all the politicians never address the real problems
such as rising medical costs and all the other things that
need to be put under control so that AMERICANS can retire
and live a life of dignity. All we can do is Vote and hope for the best.

bill cody
October 05, 2011 at 4:58 pm

i am a 60year old disable vet and i only get $716 a month, i think all that money they are sending overseas should be left here to help americans, they are so many homeless people here that need just as much help as helping those overseas, take care of American's needs first. we fought for our country and our people now our goverment needs to step up to the plate and take care of our needs first instead of helping all those other countries

October 05, 2011 at 12:52 pm

The only way to fix social security is to put ALL government employees, the president on down, on SSI. That will fix it instantly!! Why do we have them getting such benefits on our money. Vote out any one who has been in office more than one term. Term limits!!!

Frank Dowes
September 30, 2011 at 11:52 am

WHY are billions given to Nigeria an Pakistan and Mexican savage breeders, that pollute our society, given all this money??

Senior citizens who worked all their lives to build this White country are NOW deprived of a small cola to enhance their golden years.

The most detestable and traitorous act is to hold a cola from the disabled American Veterans who put their life and limb (some missing) on the line for the very safety of these imbeciles in government. Chances are these bureaucrats were never in the military.
These traitors should be dragged out and Hanged on Pennsylvania Avenue!

September 30, 2011 at 4:55 am

Glad im to get a cola this year! i really need it bad!

September 27, 2011 at 12:44 pm

Well Ron is a real nut case, If he fought in the Vietnam war like he says he did. He fought for America not the domocratic party. You sow what you reap. Get used to it the democrats will bankrupt the social security system, sooner than you think