Saturday, August 14, 2010

Social Security Benefits and Maximum Contribution Base: Probably No Increase for 2011

[mEDITate-OR:
not understand why Congress gave themselves a +V- US$ 6,000 pay raise...
but WE did not.

Jim @ CR explains why we - you, me and U.S. - didn't.
Probably the best explanation you gonna get.
Thank him, not me.
U 2 can see if this "satisfies" you.
U 2 can blame him, too; but not me.
--------
This graph shows CPI-W over the last ten years.
The red lines are the Q3 average of CPI-W for each year.


The COLA adjustment is based on the increase from Q3 of one year from the highest previous Q3 average. So a 2.3% increase was announced in 2007 for 2008, and a 5.8% increase was announced in 2008 for 2009.
In Q3 2009, CPI-W was lower than in Q3 2008, so there was no change in benefits for 2010.
Even though there was no increase last year, and there will probably be no increase this year, those receiving benefits are still ahead because of the huge increase in Q3 2008.
For 2011, the calculation is not based on Q3 2010 over Q3 2009, but Q3 2010 over the highest preceding Q3 average ... the 215.495 in Q3 2008. This means CPI-W in Q3 2010 has to average above 215.495 or there will be no increase in Social Security benefits in 2011.
In July 2010, CPI-W was at 213.898, so CPI-W will have to average above 216.294 in August and September for the Q3 average to be at or above Q3 2008.
That suggests an increase in COLA is very unlikely right now

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Social Security Benefits and Maximum Contribution Base
Probably No Increase for 2011
http://www.calculatedriskblog.com/2010/08/social-security-benefits-and-maximum.html
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