Saturday, July 16, 2011

First Cost of Living Adjustment in Three Years Remains Likely, Will Impact Budget Deficit and Length of Social Security Solvency.

Piece from National Association of Realtors HERE forecasts a 3.5% annual adjustment in cost of living index used to adjust Social Security, SSI, and federal/military retirement pay.  Data out yesterday shows a 3.21% increase for last three months vs July-Sept 2008 data; the actual adjustment amount will be determined by the next three months of data compared to same period in 2008. 

NAR piece also points out that projected increase is larger than is used in current Social Security actuarial assumptions and that change upward would reduce the period of solvency of the SS fund. Similarly, if current budget assumptions used a projection less than projected increase, it is likely the CBO at some point will score the budget deficit higher because of the higher projected increase in the COLI. 

For the many assisted rental tenants receiving SSI or SS this could be the first direct increase in income they will have received in the three years. Rental programs where tenant paid rent is a function of income could see a very minor decrease in subsidy needs (if rent level remained constant) as tenant portion of rent paid should increase by 30% of the COLI % increase. 

Orginally created and posted on the Oregon Housing Blog.

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