Social security Cola ratings ended – how are they compared to last year?

Social security applies the annual living costs (Cola) to keep up with rising prices, which comes into force in January each year.

The Seniors League (TSCL), a non -profit organization that advocates senior rights, reports COLA assessments based on inflation data. In its latest prognosis published on June 11, TSCL predicts 2.5% Cola 2026.

The official cola will not be announced by the Social Security Administration (SSA) until October, but it is worth paying attention to ratings, so current and soon future retirees may start planning their finances accordingly.

In order to determine the percentage of COLA setting each year, social security considers the consumer price index for city wage earners and office workers (CPI-W).

The CPI-W is an inflation tool published monthly by the Bureau of Statistics (BLS). It deals with the cost of total costs such as housing, food, transport and medical care. Here are steps that are followed by social security for Cola:

1. Average CPI-W data in the third quarter of this year (July, August and September).

2. Compare the average of the current year with the average of previous years.

3. If it has increased, set Cola to match the percentage increase; If it has fallen or remained the same, there is no cola.

For example, if the CPI-W average is 3% higher than in previous years, the Cola, which goes to the next year, will be set to 3%.

Although social security pension benefits began in 1940, the annual Cola was not a thing until 1975. Since then, the average annual Cola was 3.4%, but the amount was very different. The highest cola of all time was in 1980, 14.3%. The lowest cola was in 2010, 2011 and 2016, when there was no increase in any benefit. Here is the last 10 “Col.”:

Data source: SSA.

The annual Cola is appreciated, but it does not always keep up with inflation to reasonably eliminate it. According to TSCL, since 2010 The purchasing power of social security benefits decreased by 20%. This means that the value of $ 1 benefit would be approximately $ 0.80. Not ideal.