Social Security Going Up in January

The Cost of Living Adjustment (COLA) for Social Security in 2009 has been announced: retirees will see an increase of 5.8%. It takes effect in January.

This is the biggest increase in 26 years. The COLA is based on the Consumer Price Index (CPI) figured by the Department of Labor.

Most SS retirees count on the monthly check for 50% or more of their income. For about 1/3 of SS retirees, the check is 90% or more of their income.

Before 1975, Social Security increases were the business of legislation. Starting in '75, increases were tied to a formula with the CPI being compared from one year to the next (focusing on one quarter's change in CPI). The result has been annual COLAs ranging from 1.3% to 14.3% but as you might guess, most COLAs have been closer to the low end than the high end.

Across the 34 years of COLAs, only twice has the percentage been above 10%: 14.3% in 1980 and 11.2% in 1981.

In 2 years, COLA was above 10%
In 2 years, COLA was above 8% and below 10%
In 3 years, COLA was above 6% and below 8%
In 7 years, COLA was above 4% and below 6%
In 17 years, COLA was above 2% and below 4%
In 3 years, COLA was above 0% and below 2%

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.