Oct 19

Any Cost-of-Living Adjustment for SSD Next Year?

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SS CardSomeone on Social Security Disability (or receiving other forms of Social Security benefits) fully understands what a COLA (cost-of-living adjustment) is and often relies on it each year. Unfortunately, for the upcoming year, there will be increase in benefits as the Social Security Administration recently published that there would be no cost-of-living adjustments increase in 2016.

The Purpose of a COLA

The purpose of a cost-of-living adjustment (COLA) is to make sure that inflation (when the prices of goods and services rise) does not get so high that a Social Security recipient’s benefits are no longer enough to purchase the things they need to live. For example, if during one year goods and services cost twice as much on average as the year before, a Social Security recipient would only be able to buy half as many goods and services with the same amount of money.

The cost-of-living adjustment is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a COLA was determined to the third quarter of the current year. If there is no increase, there can be no COLA. Since it was determined that there was no increase in the CPI, it was decided that there was no justification for a cost-of-living adjustment.

Prior Years of No Cost-of-Living Adjustments

Congress enacted automatic cost-of-living increases for Social Security beneficiaries in 1975, when inflation was high and there was a lot of pressure to regularly raise benefits. Since then, increases have averaged 4 percent a year. However, 2016 will be only the third time that there has no cost-of-living adjustment. 2010 and 2011 were the other two years of no cost-of-living increases.

Conclusion

Although the recent increases have not been significant, Social Security recipients rely on the increases each year to live. Yes, the numbers show that gasoline prices are down by 30 percent from last year and airfares have fallen by 5.9 percent and clothing prices are down by 1.3 percent. But, is that what most Social Security recipients spend their money on? What about the numbers showing that medical care has risen by 2.4 percent, housing costs climbed by 3.2 percent and food prices were 1.6 percent higher. Shouldn’t we look at those numbers?

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ssd attorneyAttorney Matthew Noyes represents those fighting to obtain Social Security Disability benefits as well as those injured in car accidents, motorcycle crashes, bicycle accidents, pedestrian accidents and other types of personal injury matters. He is a named partner at the Tampa Bay law firm of Perenich Caulfield Avril Noyes – one of the oldest personal injury law firms in Pinellas County. Call Attorney Matthew Noyes now at 727-796-8282 or complete the form on this page or simply click here to schedule a free case consultation.

  1. Kayt 20 Mar 2016 | reply

    I received a settlement of just 12K dollars, after being off of work for 5 years. I only receive $963.00/month after medicare is taken out. Do I have to claim the lump sum amount to the IRS? Do I have to pay taxes on it? I just started receiving my benefits as of 6-15-2015.

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