Social Security COLA Increase
Social Security beneficiaries will see a raise in their benefits next year, resulting from a 3.6 percent cost-of-living adjustment (COLA) increase. The last time seniors saw such an increase was 2009, when they received a 5.8 percent bump in their Social Security checks. While this year's adjustment comes after two straight years of no COLA increase and is less than the 2009 increase, it is more than the average adjustment of the past ten years, which is 2.4 percent. This turns out to be about an average of $39 more per month or $467 per year (which may give a very slight boost to economic activity, although it might be tempered by the now likely increase in Medicare Part B premiums).
Increases in COLA's are calculated from third quarter to third quarter changes in inflation (as measured by the CPI-W).
As we have stated many times before, switching to the chained-CPI would be better for our fiscal future and more accurately reflect cost-of-living adjustments, because the chained CPI measures inflation more accurately than the currently used metric. This is probably why moving to a chained CPI has received such widespread bipartisan support.