Largest Social Security COLA Increase in Over 25
Years May Greet Senior Citizens in 2009
Current trends indicate it will be over 6% and
largest cost-of-living adjustment since 1982; announcement due next
15, 2008 – Senior citizens may be headed for their largest pay increase
– or cost of living adjustment – in more than 25 years, following this
year’s Social Security COLA of only 2.3 percent. Projections are now
being made that the increase for 2009 will almost certainly exceed six
History of Increases
The COLA for December 1999 was originally determined as 2.4
percent based on CPIs published by the Bureau of Labor
Statistics. Pursuant to Public Law 106-554, however, this COLA
shown for January 2000 is effectively now 2.5 percent.
This is not necessarily good news, since it
reflects the rate of inflation for goods and services seniors have to
buy, but is much better than no cost of living adjustment as in most
The COLA in 2008 was just 2.3 percent, the smallest
since 1904. The Social Security Administration estimated it added $24 to
average retired senior citizen’s wallet each month. The projected
increase for 2009 of over 6 percent indicates the average senior may get
an extra $75 per month in 2009.
One of those who keeps a watch on the COLA is
Mike Causey, who reports on Federal News Radio.
“Federal-military and Social Security retirees will
get a cost of living adjustment in their January, 2009 checks. With one
month (this month, September) left in the inflation-tracking countdown,
the 2009 COLA pay is now on track to be 6.2 percent,” he says in his
Sept. 10 report on
Federal News Radio.
His projection, however, only reflects actual
economic results for one of the three months that will determine the
COLA for seniors. At the end of July the Consumer Price Index for Urban
Wage Earners and Clerical Workers (CPI-W) – the CPI index used to
determine COLA for Social Security - was 6.2 percent higher than July of
The CPI measures the average change in the prices
paid for a market basket of goods and services. These items are
purchased for consumption by the two groups covered by the index: All
Urban Consumers (CPI-U) and Urban Wage Earners and Clerical Workers,
The continued high price of gasoline almost assures
the inflation index will stay high for August and September. The August
numbers are expected to be released tomorrow by the Bureau of Labor
And, even at the White House the numbers are
changing to project a higher COLA that expected just a few months ago.
In late July, the White House issued the
President’s Mid-Year Budget Review and added $47 billion to expected
outlays for Social Security over the next five years.
Bureau of Labor Statistics says critical consumer
price index jumped 5.9% in August
Sept. 16, 2008
The reports says one of the reasons for the
increased projection is “higher projections for Cost of Living
Adjustments (COLA).” Although, the report did not specifically say what
the COLA increase was expected to be. They did, however, increase the
projection made just in February for 2009 by $6.8 billion.
The official COLA announcement by the Social
Security Administration is normally made shortly after the middle of
October, when the CPI-W numbers for September are final.
The bump seniors get each year is based on the
increase in the Bureau of Labor Statistics' CPI-W, from the third
quarter of the prior year to the corresponding period of the current
This year's increase in the CPI-W was looking small
earlier this year but the recent inflation numbers are expected to make
the third quarter gain substantial.
The problem is the increase is only aimed at
keeping Social Security recipients at the same relative income level.
So, no matter how high the pay raise seniors get, it may well be eaten
up by inflation.
Seniors have actually been losing ground in recent
years because of the gigantic increases in healthcare costs, which has
been much higher than the average increase for the CPI-W. This year,
however, recent reports indicate a substantial slowing in the rate of
increase for healthcare costs.
Keep up with the latest news for senior citizens, baby