Jul 17, 2019

Expect A Lower COLA This Year

     By the Motley Fool's calculations, if things stay on their current course, Social Security's Cost of Living Adjustment (COLA) for this year will be about 1.4%, which is half of last year's 2.8% increase.

11 comments:

Anonymous said...

It is a function of having the COLA calculated off of the wrong index. People receiving these benefits (62 million people or more than 1 in every 6 residents in the US) are seeing the every day costs of the things they need and use raise much more than 1.4%, rent, food, fuel, medical care and medication, utilities, just to name a few.

Funny that you cant get almost 20% of the country to stand up in a unified manner to force a change to a more equitable COLA index. Show a plastic straw in the ocean on Facebook and it goes viral, but actual real issues go unchanged. I guess it does extend the life of the trust fund a little though.

Anonymous said...

You say costs has risen "much more" than 1.4% but with no evidence. Is CPI_E the right index? If so, how much has it gone up from Q3 2018 to Q3 2019?

Anonymous said...

@2:20

Not 9:33, but I think their point was that the factors that go into the CPI-E are not accurate as to the average disabled recipient's cost of living, not that there was an alternative index that exists that should be used.

CPI-E looks at 8 areas: housing, transportation, food and beverages, medical care, recreation, education and communication, apparel, and other goods and services. Some would likely in fact be lower than the average elderly individual; recreation being the most obvious. But others; medical care and possibly transportation being the prime examples, would likely be higher.

Anonymous said...

The US annual inflation rate fell to 1.6 percent in June 2019 from 1.8 percent in the previous month and in line with market expectations. Above the COLA amount, no matter what you say.

Anonymous said...

I haven't been able to find any recent CPI-E numbers on BLS's website - it is experimental, so maybe it isn't calculated regularly. The latest I found was that from 1982 to 2007, the average annual increase in the CPI-E was 3.3%, while the CPI-W (which determines COLAs) rose 3.0% per year (the CPI-U rose 3.1%) - see URL below. So not a big difference, although I've seen articles that claim a much bigger difference based on their supposed calculations.

BLS article:
https://www.bls.gov/opub/mlr/2008/04/art2full.pdf

Anonymous said...

2:45 CPI-E is an experimental index of costs weighted for the elderly, not persons with disabilities. That is true. As far As I know there is no index for the latter.

But I also think there is confusion between level and change. No doubt the level of costs for some (maybe most) persons with disabilities is much higher than for those without. But says nothing about how those costs are changing which is what COLA is trying to represent. higher levels of costs are arguments for raising the benefit, having more comprehensive coverage under Medicare, or maybe some kind of refundable disability expenses tax credit. But it does not tell us about change from 1 year to the next.

-2:20

Anonymous said...

@3:56/2:20

2:45 here. Maybe I'm giving the federal government too much credit, but why not just make a new index, specifically using data from disabled/retirees? I'm not expecting much; you wouldn't even have to resurvey the data annually, just adjust any markedly lower or higher cost areas for the population in comparison to the general elderly population and rely on general data measured in the other indexes. Sortof a "sub-index."

Seems like a pretty simple solution...although then I suppose the dispute would become how much is "markedly lower or higher."

Anonymous said...

Sometimes the COLA gets a boost that comes out of nowhere like about 7 years ago when it was over 5%, mostly due to a spike in gas prices. There was no drop in benefits even though the COLA was lower the next couple of years.

Anonymous said...

I remember researching cost of living for people with disabilities a number of years ago and there was a lot of anecdotal evidence but not much else. I suspect that the cost of living for people on SSI would be higher than expected due to the severely restricted ability to acquire and save money due to program income and resource rules. For example, one cannot save up for bigger necessary expenses that save you money in the long run (reliable car for transportation that doesn't often break down, deposit for rent allowing you to move to a more affordable place, etc.) without significant penalty. They are more likely to incur big expenses and losses because they cannot keep any significant rainy day fund, except in the rare circumstances of having access to a special needs trust or if they qualify for an ABLE account and are fortunate enough to have family or friends to fund them. Money is so tight for most SSI recipients that minor cost savings that can add up, like buying certain things in bulk to save money, are sometimes not an option. Capturing that data would be tricky without looking closely at the effect of a low fixed income stream and resource ceiling on a person's actual cost of living, and any additional expenses due to disability (things they need that Medicaid won't cover, etc.).

Anonymous said...

because it will cost more money and deplete the programs even faster and they will have to raise my taxes and retirement age again.

Anonymous said...

@8:32

Actually, it could find that the average disabled person has a lower cost of living than the average retiree...so it could save the system money, and possibly even increase your benefits, assuming you are on retirement.

If you meant that studying costs would cost money and deplete the programs faster, the study would be conducted by the Department of Labor’s Bureau of Labor Statistics, not SSA. So it would not impact the programs' funds.