Newspapers and magazines start predicting what the percentage of the COLA for Social Security and Supplemental Security Income beneficiaries will be just as you are celebrating the last days of summer each year. No one will know the amount for sure until about mid-October. Knowing what the amount is will be better for your financial planning than knowing what it might be. Social Security releases a press release each year with the official information at www.ssa.gov.
Some people believe that the President of the United States determines the amount. Some people believe that Congress sets the amount, but neither is correct. The formula for figuring the amount is set by law.
The Department of Labor keeps track of inflation data. They compute several measurements of inflation. The one used for the computation of the Social Security COLA is the Consumer Price Index for Urban Wage and Clerical Workers (CPI-W). Labor compares the third quarter of the last year there was a COLA (in this case, 2017) to the third quarter of the current year.
The quarters are: January – March, April – June, July – September and October – December. That means that the third quarter ends on 9/30 of any year. Computation of the COLA cannot begin before then. That is why each year’s COLA isn’t announced until mid-October.
You can continue to read the articles that predict the COLA, but remember Social Security will not announce the official number until October. Find the new COLA amount for 2018 on our website at www.ssa.gov under the Press Release tab of the Newsroom section on the homepage.