Update August 1, 2013
Here is an update on the likely Social Security COLA for 2014. This is based on the CPI-W for the months of April, May and June. The average for those months is 229.45. That is compared with the average for July, August and September of 2012 which was 226.936. Based on the change in those averages, the COLA would be 1.10% for 2014. Note that there was a slight increase in the CPI-W in June to 230.002. The actual 2014 COLA will be based on the average of the CPI-W for July, August and September compared with the same period in 2012.
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UPDATE: July 2013. What the White House projects for 2014 COLA
If the Social Security COLA calculation was done today, the COLA for 2014 would be slightly less than 1%
The base for the calculation is the average CPI-W for the third quarter of 2012. That average is 226.936.
The average for the CPI-W for February, March and April 2013 is 228.983. The difference between the two numbers is 2.047 or a .9020% difference.
UPDATE: JUNE 18, 2013
The CPI-W for May 2013 is 229.399 generating a three-month average for March, April and May of 229.223 which results in a 2014 Social Security COLA of 1%
THE ACTUAL CALCULATION FOR 2014 WILL BE BASED ON THE AVERAGE CPI-W FOR THE MONTHS OF JULY, AUGUST and SEPTEMBER 2013 COMPARED WITH THE 226.936 NUMBER FROM 2012 SO THINGS CAN CHANGE.
However, all indications now are that inflation will remain low. In April 2013 inflation actually dropped by .2% (mostly because of gasoline prices).
If the 2014 COLA is very low or if there is none, this is bad news for Medicare beneficiaries who pay the supplemental Part B and D premiums. This is because their premiums will increase regardless of a COLA whereas the majority of Social Security beneficiaries are prevented by law from any Medicare premium increase that would reduce their monthly SS benefit. That is, a premium increase greater than the dollar value of a COLA. To make matters worse for the higher income folks, if there is no premium increase for the majority of seniors, the ones paying the supplemental premiums must pay more than normal to pick up the difference for those protected from an increase.
As you can see below, the supplemental premiums kick in at an income greater than $85,000 for a single person.
$85,000 may be a good income relative to many on Social Security, but it is no millionaire or billionaire as the popular phrase goes. In addition to the above premiums, these individuals pay a supplemental Part D premium as well.
Categories: Social Security