COLA Used for Social Security and Other Programs Will be VERY Small or ZERO For Second Year in a Row.

Calculated Risk explains why HERE . Short version is that COLA increase will ONLY occur if third quarter 2010 index is higher than 2008 (NOT 2009) third quarter index (the third quarter 2008 index was higher than third quarter 2009 index).

(I have seen in a CBO document that they are using a projected .1% increase for SS COLA's this year, so it is possible that the increase will not be zero. A .1% increase on a $1,000 monthly benefit would be a monthly increase of ONE dollar or 12 dollars a year).

Most favorable way of looking at COLA increase process is that 2008 provided a windfall that was not recaptured when index went down (and has yet to get back to 3rd quarter 2008 level). How adequately official index captures actual cost of living expenses for retirees is another question, especially if greater share of elderly budgets for medical expenses are not properly reflected in index.

Increased Rent Burdens?
With a zero increase, renters whose sole or primary source of income is Social Security or SSI will have increasing cost burdens if rents increase, even if increase is only enough to cover increased property expenses.

Originally created and posted on the Oregon Housing Blog.