Each year, the Social Security Administration announces a figure indicating the percentage by which beneficiaries’ checks are to increase. This figure, known as the cost-of-living adjustment (COLA), is supposed to account for the inflation of prices for gas, food, housing, and other goods and services.
Although a couple weeks delayed, the Social Security Administration has announced the COLA for 2014. As was expected, the increase was disappointing, coming in even lower than last year. While the COLA for 2013 was 1.7 percent, next year’s figure is set at 1.5 percent. These numbers are relatively low, compared to the 3.6 percent increase in 2013.
Prior to 2013, the last COLA was in 2009. Since adjustments began to be made in 1975, the average increase has been 4 percent. Since these adjustments began, the numbers have been based on the percentage increase in the average Consumer Price Index for Urban Wage Earners and Clerical Workers for the third quarter of the present year divided by the average for the third quarter of the last year in which a COLA was implemented.
With the increased criticism of the Social Security Administration and the attempt to find ways to reduce costs for the agency, it has been suggested that an alternate calculation be used. This method, referred to as “chained CPI,” would yield even smaller COLAs. With the new number having been released for 2014, advocates for the disabled are using it as evidence that the chained CPI method would be inappropriate, since it would yield even less of an increase for beneficiaries.
Although the COLA for 2014 is not as high as it could be, it will still provide partial relief to beneficiaries.
Source: Disability Scoop, “Social Security, SSI Benefits To Rise In 2014,” Michelle Diament, October 3, 2013.