Many individuals with disabilities here in Michigan receive Social Security benefits, such as Social Security Disability benefits or Supplemental Security Income benefits. SSD and SSI benefits can play a major role in helping individuals with disabilities meet their expenses.
Inflation can sometimes lead to an increase in the expenses of a disabled individual who is receiving Social Security benefits. To account for these increases, the federal government makes annual adjustments to Social Security benefit amounts. The annual adjustment is called the cost-of-living adjustment (COLA).
Generally, in October of a year, the COLA that will be applied in the following year is announced. Some uncertainty has arisen regarding whether the announcement of the COLA for 2014 will occur this month, given that the government shutdown has led to a delay in the release of some of the data that is used to calculate the COLA. One wonders if the COLA announcement will ultimately be made on schedule.
Some estimates have been made regarding what the COLA will be for 2014. Currently, the 2014 COLA is expected to be around 1.5 percent. Since 1975, the average COLA has been 4.1 percent. Thus, if the 2014 COLA does end up being in line with the estimates, it would be a very low COLA. This would make it so four of the last five COLAs were very low or nonexistent (the COLAs for 2010 and 2011 were both zero and the COLA for 2013 was 1.7 percent). Thus, lately, we’ve been going through a stretch of small COLAs. One wonders what impacts this trend has had on Social Security benefit recipients. One also wonders how long this trend will continue.
How is the COLA calculated? The COLA is based on annual changes in a consumer price index. The index in question is the Consumer Price Index for Urban Wage Earners and Clerical Workers. Some question whether this index really is an accurate measure of the price of the things that Social Security benefit recipients purchase. This is an important issue to consider, given that one would hope that the COLA would accurately reflect the expense increases benefit recipients are facing.
Source: nbcnews.com, “Social Security raise to be among lowest in years,” Stephen Ohlemacher, Oct. 13, 2013