A Thorough Explanation of Cost of Living Adjustments - AMAC & The Motley Fool
Seniors know they get a cost of living adjustment (COLA) every January 1st, though the increase has been 0% several times in recent years. Sean Williams explains in great detail the rather strange way this calculation occurs, in that it uses only third-quarter data year over year. Also, urban workers are used in the calculation rather than retirees, and the goods and services the latter spends more on is quite different than younger people of working age. Still, Williams notes Social Security recipients are poised to get the largest COLA in about four decades. But he cautions not to cheer too loudly. No one is getting ahead. It merely allows retirees to barely keep pace with rising prices. The full article is here.
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