For the last two years Social Security recipients have not received cost of living increases as the base period (the highest prior 3rd quarter index) for 2008 has been less than the index in the 3rd quarter of 2009 and 2010.
I calculate that with recent increases in the COLI, if the COLI average for the first quarter 2011 remains the same in the third quarter, Social Security recipients would receive a 1.2% increase. (217.986/ 215.495-1=1.16%, rounded to 1.2%).
In looking at historical data for every year since 2001 the 3rd quarter COLI index average has been greater than the 1st quarter average, so the likelihood is that there will be an increase and it could be higher than this projection. The publication of the 3rd quarter COLI data will not occur until Mid October 2011 and the increase would not be effective until January 2012.
As federal employee pensions and disability payments are also adjusted using COLI, any SS COLI increase will have multi billion impacts on the federal budget for FY 2012. The method of COLI calculation in future years seems likely to be included in upcoming budget debates.
Originally created and posted on the Oregon Housing Blog.