Best Estimate for 2018 COLA: 2.2%

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By on August 11, 2017 in Retirement with 0 Comments

 

five Social Security Cards stacked together

A topic of interest to many current and soon-to-be retired federal employees is the annual cost of living adjustment (COLA) for Social Security recipients and federal retirees. The annual increase has averaged about 1% since 2012. This average includes Social Security and federal retirees not receiving any increase in 2016.

The latest monthly inflation figures have been released by the Bureau of Labor Statistics. Insofar as this impacts the annual cost-of-living-adjustment to civil service annuities and Social Security recipients, the news may be disappointing.

In July, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased 0.08 percent in July. The CPI-W is the index used to calculate the formula in determining how much of an increase there will be starting in January.

Federal retirees received an 0.3 percent cost-of-living adjustment to their civil service annuities in January 2017. Social Security benefits and military retirement annuities were increased by the same amount.

Current Estimate for 2018 COLA

The new CPI-W figure for July 2017 was 1.52 percent higher than the average CPI-W for the third quarter of 2016. This is significant as the third quarter of 2016 is the time period for the comparative rate of inflation that will be used to determine the 2018 COLA.

As of now, the best estimate from the Board of Trustees for Social Security is that the COLA for 2018 will be 2.2%.

The low estimate for the 2018 COLA based on the agency’s estimate is 1.5% with an estimate on the high end of 2.9%. The best estimate offered as of today by the Board of Trustees for the Social Security Administration is 2.2%.

Effective Date for 2018 COLA

The Social Security Administration will not make its official announcement about the 2018 COLA until mid-October. The final figure will be implemented in January 2018. The annual COLA increase, if any, is determined by a formula based on data from the Bureau of Labor Statistics. Statisticians and economic prognosticators can, and are, making educated guesses about the amount of next year’s COLA increase.

© 2017 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47

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