Abromson & Carey, Attorneys at Law
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Phone: 888-512-7031

How is a cost-of-living adjustment calculated?

As was reported in the most recent post, Newark, New Jersey, recipients of SSI benefits may see a very modest increase in their monthly benefit, as the Social Security Administration has determined it must apply a cost-of-living adjustment of less than 1 percent for 2017.

As mentioned, the cost-of-living adjustment, or COLA, is an automatic increase in Social Security payments, including payments for Supplemental Security income, used to account for ordinary economic inflation. To figure the COLA, the administration uses a formula based on the Consumer Price Index, as geared toward "clerical workers" and "urban wage earners."

The Consumer Price Index, which measures how much the typical person with a given description pays for the most common consumer goods, is determined by another governmental agency. The Social Security Administration then uses the other agency's data to determine a COLA each year by calculating how much consumer prices have increased over a given span of time, that span of time being the last time a COLA was applied.

Percentages are rounded to the nearest tenth of one percent; if the Administration determines after using its formula that prices have gone down or have increased by less than one tenth of one percent, then New Jersey SSI recipients will not see a COLA for that year.

As previously reported, the Administration expects a nominal cost-of-living increase, meaning it is possible that an individual New Jersey resident drawing SSI could see more than the current $733 a month maximum payment. Of course, SSI recipients need to remember that, because SSI is a program for those of very limited financial means, any income or assets a person has may prompt the Administration to reduce that person's benefit.

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