Why Social Security Cost of Living Adjustments (COLAs) Are SO Important

Well this could be good news.

The folks over at the fool.com are giving us reasons to think that the Social Security Cost of Living Adjustment for 2019 could be the largest since 2012.

Given what I posted two days ago on how inflation is destroying Social Security beneficiaries purchasing power, a 3% or more COLA is long coming.

We’ll see if it comes to fruition. But, as the fool points out, it looks pretty set.

The problem with Social Security adjustments is that it’s based on the CPI-W which is more an analysis of cost increases for working people, not retirees. So, things a retiree may be affected by may be counted less in the CPI numbers than what affects a worker.

Energy, for instance, represents less than 5% of the CPI-W. Does the average retiree have a larger energy expense? How about health care? etc.

Until the COLA adjustment is made more geared towards retirees there is nothing we can do other than be happy when a larger COLA comes down the pike, like seems will happen next year.  We shall see.


Over the past few days, I’ve shared with you some thoughts on Social Security planning.

In my last email, I even gave you a teaser, so to speak, of why COLAs in Social Security should not be overlooked.

In this video, I show you EXACTLY why that is.

It’s pretty simple, once you think about it. John has a $1000 a month Social Security benefit and his wife Jane $1500. Thus Jane gets $500 more a month than John. With me so far?

They both receive a 3% COLA next year on their Social Security benefits. So the next year, John will receive $1030 a month. Jane $1545.

How much more is Jane getting than John now? $515. So that COLA put an extra $15 in Jane’s pocket than it did for John, even though it was the exact same percentage increase. If you play this out over the course of years, that increase for Jane gets larger and larger and…you get the point.

But it doesn’t stop at Jane’s death either. When Jane dies, if she dies first, John will get the benefit she was receiving at death or his own, whichever is larger.

Even a poor boy from an island in Maine (that’s me in case you were wondering) can figure this out.

Most Social Security planning leaves out this significant aspect of COLAs. And that’s a HUGE mistake.

The video referenced above is Part 2 of my two part webinar/seminar program I do on Social Security planning. Part 1 is here.

If you are in the North Atlanta suburbs, I am doing this presentation next week, here in Milton on June 19th and 21st. By all means, contact me and it’d be my pleasure to provide you the address for you to attend.

If you are part of a group that could benefit from this presentation, let me know too and I’d be happy to do it.

As always, any questions, thoughts or concerns, just contact me.

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