Ever wonder how the Social Security Administration calculates the cost-of-living adjustment applied to monthly benefit payments?
The Economy 101 column of the June issue of Practical Money Skills for Life newsletter features an article on COLA (Cost of Living Adjustment): how it is determined and how it is applied by the SSA.
The basis for the COLA is the CPI (Consumer Price Index) as produced by the U.S. Department of Labor Bureau of Labor Statistics. The specific CPI used by the SSA is the CPI-W, the one which incorporates changes affecting urban wage earners and clerical workers. CPI-W rate changes are measured during the third quarter each year and then applied to monthly payments beginning in December. Confused? Read the whole article here.
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Photo of splashing glass of cola (cc) by themysteryman and republished here under a Creative Commons license. Some rights reserved.
