Retirement

No Social Security COLA for 2016 (like you didn’t already know)

  

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2 replies »

  1. I know that many people are upset that there will be no COLA in 2016. The Social Security trustee report for 2015 got it right, sort of. They knew the way the government figures inflation that there would be no COLA.
    But, will they be right for the next few years, they have the COLA 2016-3.1, then 2.7 for the next 8 years and beyond. When the average for the last 41 years being 3.88, I think the government is underestimating inflation. This saves the government money.
    1. In 1983, housing prices were removed and “owner’s equivalent rent” was used instead.
    2. In 1998, Hedonics was introduced to estimate a product’s value as technology advances.
    3. In 1999, the idea of product substitutions was introduced to the index.
    Everyone who shops for food each week knows that prices have gone up. Since most people spend more on food, medical care and other things, more than gasoline inflation cannot really be zero. Since we are spending less on gasoline, because of higher mpg, gasoline should carry a lesser weight in the index. The link below will give you some idea of how the government
    sees things. Lies, Damned Lies, and Statistics.
    http://www.cornerstonewm.com/downloads/measuring-inflation.pdf

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    • Two things; they don’t know the future any better than you or eye and the COLA is based on the CPI-W a bit different than the CPI.

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