October 19, 2011

With the release of the September price data, we now know the 2012 cost-of-living adjustment for Social Security and Supplemental Security Income benefits. From the third quarter of 2008 to the third quarter of 2011, the Consumer Price Index for Urban Wage Earners (CPI-W) rose 3.6 percent. For a retiree receiving $1,115 per month, the COLA will add $482 to annual benefits in 2012.

It is worth noting that some have proposed cutting benefits by calculating the COLA based on the chained CPI (C-CPI-U) rather than the CPI-W. If this policy had been in place today, beneficiaries would receive only a 2.8 percent COLA next year. Over time, these smaller COLAs would add up. Compared with current law, a retiree who received $878 per month in 2001 would, in 2012, see his/her annual benefit decrease by $462 (3.3 percent) under the chained CPI.


For more, check out the latest Prices Byte.