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Social Security Announces Cost-of-Living Adjustment

By Gregg October 20, 2016

On Tuesday, October 18, The Social Security Administration (SSA) announced that recipients of Social Security benefits will receive a 0.3 percent cost-of-living adjustment (COLA).  The modest raise is among the annual increases in benefits since the method for calculating the increase was implemented in 1975, other than the three years in which there was no adjustment, including last year.  The small increase is the result of only a small annual change in the price of common consumer items.

COLA is calculated based on a formula set forth in the Social Security Act. The calculation is based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).  The CPI-W measures monthly price changes in food, housing, clothing, transportation, energy, medical care, recreation, and education.  SSA compares consumer prices in July, August, and September with prices for the same months in the previous year.  COLA is the percentage increase in the average of these prices.  If there is no increase or a decrease in prices from year to year, there would be no COLA that year.  This marks the third year that COLA will be less than 2 percent. Since COLA has been calculated, there have only been two years in which there was no increase in benefits (2010 and 2011).  Since inception, the COLA has averaged just over 4%.

The 0.3% raise in benefits will be effective for December 2016 benefit payments, payable in January for retirement, survivors and disability benefits, and for the December 31st, 2016 Supplemental Security Income payments.   The average monthly benefit for Social Security disability benefit recipients will be $1,171.

The amount of monthly earnings needed to trigger a Trial Work Period (TWP) month will by $840 in 2017, up from $810 in 2016.  Earnings below this threshold will not be considered an attempt to work.  Work activity over this amount can be attempted for up to nine non-consecutive months before being considered a successful return to work.  Social Security also announced that it is raising the maximum amount of earnings subject to the Social Security tax withheld from wages.  Individual wages up to $127,200 will be subject to the Social Security tax beginning in January of 2014, up from the former maximum taxable earnings level of $118,500.


Nothing in this post is intended as advice or a suggestion to elect or not elect to claim benefits of any kind, including Social Security benefits, nor is it intended as financial advice in any way.  The decision to claim benefits is a personal one that is contingent upon each individual’s unique circumstances.

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