The Cost of Living Adjustment (COLA) won’t be announced until mid-October 2017 but it appears the cola increase will be about 1.8% with one month remaining. The inflation measurement period is the 3rd quarter (July, August, and September) of 2017 so we won’t know for sure until we have the September inflation numbers. However, CPI-W, the inflation measurement used to determine the COLA increase, for July and August shows a 1.75% increase year over year. The September CPI-W numbers will determine if that number goes a little or lower from there. Hurricanes Harvey and Irma may drive up gas prices in September, a component of inflation in the CPI-W, but it is not expected to be enough to get to the Trustees projected 2.2%.
In July 2017 the CPI-W increased 1.49% over 3rd quarter 2017 and in August teh CPI-W increased 1.90%.
According to the Trustees who oversee the social security program they projected a 2.2% cost-of-living increase in 2018. A 2.2% increase would be about $30 a month but it now appears unlikely they it will be that high with 1.80% being a more likely estimate. The Social Security increase will not be announced until mid-October 2017 when COLA (Cost of Living Adjustments) for the third quarter.
The 2017 COLA increase was announced on October 18, 2016.
|Official COLA Measurement – CPI-W
|Third quarter total||705.17||TBD|
|Average (rounded to the nearest 0.001)||235.057||TBD|
|Inflation According to the CPI-W||0.3%||TBD|
Last year the COLA increase was 0.3 percent cost-of-living adjustment which was about a $4 monthly benefit increase for the average retiree, or about $48 per year.
|Quarterly CPI-W for 2016 thru May 2017|
A 2.49% CPI-W increase in the first quarter of 2017 is a positive sign towards a COLA increase in 2018. The second quarter slowed a bit to 1.77%.
|Monthly CPI-W for 2016 thru July 2017|
|Month||2016 CPI-W||2017 CPI-W||YoY Increase|
2018 Cola Effective & Payment Dates:
- Retired military veterans, VA rates for compensation and pension for disabled veterans and surviving families will be effective December 1, 2017 and will be reflected on the first check to be paid on December 31, 2017.
- Social Security benefits will be effective beginning with the December 2016 benefits, which are payable in January 2018.
- Federal SSI payment levels will be effective for payments made for January 2018.
How COLA is Determined
The Cost-of-Living-Adjustments (aka Cost-of-Living Allowance) is determined by the Bureau of Labor Statistics’ Consumer Price Index (CPI-W). It is based on the percentage increase of the CPI-W from the 3rd quarter of the previous year versus the current year’s 3rd quarter (July, August, and September).
Veterans who retire during the current calendar year will receive a temporary partial COLA due to already receiving a military pay raise in January.
- The COLA increase is only set at the CPI-W if the increase is less than 2 percent.
- If inflation is between to 2 to 3 percent than COLA is set at 2 percent.
- If the CPI-W is greater than 3 percent than COLA is set at 1 percent below the CPI-W.
|History of COLA (cost-of-adjustments) since 1975|
|Money & Finance||2017-2018 Cola|
|2017-2018 VA Disability Rates||2017-2018 Social Security|