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Social Security Regulations currently have no provision for decreasing benefits, so it would seem that if there is no increase in the indexes used to determine a cost of living increase, the benefit would stay the same.
Of course, this could change in the future. Nevertheless, it would be a very unpopular change, and Congress would risk angering many citizens.
OK, so if this is true the index decreasing would result in benefits remaining the same. That would be helpful.
If the benefits don't decrease despite a decline in the index, what would be the baseline for the following year? To calculate the raise for the subsequent year (2 years out) would they still use Oct 2008 if the CPI-W for Oct 2009 was lower than 2008?
(a) General. Depending on the OASDI fund ratio, we measure the rise in one index or in both indexes during the applicable measuring period (described in paragraphs (b) and (c) of this section) to determine whether there will be an automatic cost-of-living increase and if so, its amount.
(b) Measuring period based on the CPI—(1) When the period begins. The measuring period we use for finding the amount of the CPI increase begins with the later of—
(i) Any calendar quarter in which an ad hoc benefit increase is effective; or
(ii) The third calendar quarter of any year in which the last automatic increase became effective.
(2) When the period ends. The measuring period ends with the third calendar quarter of the following year. If this measuring period ends in a year after the year in which an ad hoc increase was enacted or took effect, there can be no cost-of-living increase at that time. We will extend the measuring period to the third calendar quarter of the next year.
(c) Measuring period based on the AWI—(1) When the period begins. The measuring period we use for finding the amount of the AWI increase begins with the later of—
(i) The calendar year before the year in which an ad hoc benefit increase is effective; or
(ii) The calendar year before the year in which the last automatic increase became effective.
(2) When the period ends. The measuring period ends with the following year. If this measuring period ends in a year in which an ad hoc increase was enacted or took effect, there can be no cost-of-living increase at that time. We will extend the measuring period to the next calendar year.
So, from this, because the amount generally applicable is the CPI, the period would begin in the year of the last benefit increase.
Don't know about Social Security, but my federal pension COLA is tied to the CPI-W index too. If there's no increase in the CPI-W during the indexing period ( October through September), no COLA would be authorized for that following year. However, no reduction in my annuity is permitted either.
Don't know about Social Security, but my federal pension COLA is tied to the CPI-W index too. If there's no increase in the CPI-W during the indexing period ( October through September), no COLA would be authorized for that following year. However, no reduction in my annuity is permitted either.
What is the protection that precludes a reduction in your annuity, is it something spelled out in the retirement "contract"?
I don't see them taking back the COLA, but it could be a long time before you get another one. Of course, they could always reduce what you get by making you pay more for medicare. It isn't going up this year, but normally it does increase every year.
I don't see them taking back the COLA, but it could be a long time before you get another one. Of course, they could always reduce what you get by making you pay more for medicare. It isn't going up this year, but normally it does increase every year.
Yes, that is the real gottcha in the cost of living calculations - health care, not even insurance costs - are included in the calculation but it is a very real monthly expense. It is part of the fraud that the COLA perpetuates and part of the reason wages have stagnated while costs keep going up.
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It is part of the fraud that the COLA perpetuates and part of the reason wages have stagnated while costs keep going up.
