Today the September 2011 figures for CPI-W will be released at 8:30 am. With this announcement more than 50 million people who receive social security checks will be able to figure out the automatic Cost of Living Adjustment (COLA) increase that will be applied to their 2012 payments. There is expected to be a 3.5-3.7 increase. This increase though will be reduced by higher Medicare premiums that are also expected. The premiums have remained unchanged the last few years as the social security benefits remained unchanged.
For the last 2 years there has been a decline in the consumer price index. Due to this, there hasn’t been any COLA for the last 2 years. Presumably since there hasn’t been an increase in the price of consumer goods, there is no need to have an increase in the social security checks. The purpose of COLA is to keep the standard of living consistent for those on a fixed income. Except for the last 2 years, there has been an increase in COLA since the program started in 1975.
This increase will cause the Social Security Administration (SSA) to spend about $25 billion. Not all of this money will be able to come from current money taken from wage earners next year. Other money that the SSA has will have to be used to help cover these costs.