Understanding how the Social Security COLA is calculated.

The COLA is based on the change in the Consumer Price Index for Urban Wage Earners; the CPI-W. The change is measured using the average for July, August and September year over year. The change (increase) between those months for 2017 and 2018 will determine the 2019 COLA.

Some people say this does not accurately measure the impact of inflation on seniors; that is debatable. No measure will perfectly reflect the spending for every individual. Here is what the CPI-W measures. As you can see it includes the two major senior expenses, housing and health care.

Eight major goods and services categories covered by the CPI-W

While more than 200 items are taken into account, the eight major spending categories that, according to the Bureau of Labor Statistics (BLS), help determine whether or not SS beneficiaries, receive a raise are shown below. Examples for each category are also shown.

💵 Food and beverages (cereal, milk, chicken, wine, full-service meals, snacks)

💵 Housing (rent of primary residence, owners’ equivalent rent, fuel oil, bedroom furniture)

💵 Apparel (men’s shirts and sweaters, women’s dresses, jewelry)

💵 Transportation (new vehicles, airline fares, gasoline, motor vehicle insurance)

💵 Medical care (prescription drugs and medical supplies, physicians’ services, hospital services)

💵 Recreation (televisions, toys, pets and pet products, sports equipment, admissions)

💵 Education and communication (college tuition, postage, telephone services, computer software and accessories)

💵 Other goods and services (tobacco and smoking products, haircuts and personal services)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s