No COLA Adjustment for Social Security in 2010

April 28th, 2009  |  Published in Social Security  |  52 Comments

There’s a great US News & World Report article on the 5 Big Financial Changes for Retirees in 2010 and the first one listed is a doozy. It’s widely believed that there will be little to no near term inflation which means that Social Security cost of living adjustments will likely be zero in 2010 and beyond.

No cost-of-living boosts for Social Security. Forecasters widely predict that a slowly recovering economy will produce little or no inflation in the near term. That’s generally good news, but not for Social Security recipients, whose annual increases are tied to consumer price changes in urban areas. Health care, a major retiree expense, is not expected to see the same price moderation as will other sectors of the economy. So it’s quite possible that Social Security beneficiaries will be seeing flat payments, but still face higher prices.

2009 Social Security Taxable Maximum Increases

October 20th, 2008  |  Published in Social Security  |  1 Comment

When the Social Security Administration announced the cost of living adjustment last week for Social Security benefits, some people clapped as benefits increased. Anyone who was working probably didn’t like to hear that it would increase 5.8% because that meant the Social Security tax would increase also because the taxable maximum would increase from $102,000 to $106,800, affecting 11 million of the 164 million workers.

The Social Security “tax (which is OASI and disability) is only 6.2% so those 11 million are only taxed an additional $297.60 if they earned more than $106,800. Not a big deal. 🙂

Inflation to Increase Social Security Benefits

October 15th, 2008  |  Published in Social Security  |  1 Comment

Social Security benefits are pegged to inflation. When the government announces inflation figures tomorrow, it’s likely that a retiree’s monthly social security benefits could increase by 5% or more. Social Security calculates the Cost of Living Adjustment (COLA) using inflation over the 12 months preceding September. It’s estimated that the CPI-W, the figure used, will be above 5% since, for the 12 months trailing August, the figure was 5.9%.

Of course this is a double edged sword. On one hand, Social security retirees will get more money. On the other, things are more expensive.