Tags: Religion | retirement | cost of living | Social Security

4 Things to Know About Cost of the Living Allowance for Social Security Recipients in Retirement

By    |   Thursday, 11 June 2015 05:01 PM

Each year, millions of retirees learn how their Social Security benefit payments will be affected by the annual cost of living allowance. Based on the Consumer Price Index, this annual adjustment helps offset rising costs.

The monthly benefit of a Social Security check can be drawn in full by retirees at age 66. According to Forbes, that amount was set at a maximum of $2,663 in 2015, which is up about $20 from the 2014 amount.

Here are four things retirees should know about the cost of living adjustment (COLA).

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1. History
1. Annual COLAs began in 1975 after the provision was enacted in 1972. Before that, cost of living increases to Social Security payments were voted on by Congress.

2. Consumer Prices
Cost of living changes to Social Security benefits are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or  CPI-W. It is figured by the Bureau of Labor Statistics and considers the prices paid for certain set goods. If it does not go up, there is no COLA granted for that year.

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3. Annual Variations
The COLA for 2015 was 1.7 percent, according to the Social Security Administration. In recent years, it has ranged from 5.8 percent in 2008 to zero in 2009 and 2010. The highest automatic COLA was 14.3 percent in 1980.

4. Increases Vary
Checks won’t exactly be raised by the COLA amount. The Social Security Administration advises that the COLA percentage is an approximate increase of the benefit. The actual benefit is determined through a benefit formula, with factors including age of retirement.

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Each year, millions of retirees learn how their Social Security benefit payments will be affected by the annual cost of living allowance. Based on the Consumer Price Index, this annual adjustment helps offset rising costs.
retirement, cost of living, Social Security
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2015-01-11
Thursday, 11 June 2015 05:01 PM
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