Social Security COLA Is Diving Toward Zero

Summary

  • The Social Security Administration uses an esoteric inflation index and only three months of data to determine the COLA.
  • As of the May inflation report, the COLA would be set to zero. But May’s number is pretty much irrelevant to the final calculation.
  • Should we expect inflation or deflation in coming months? Most experts expect deep deflation, but could mild inflation sneak into the picture?

You might think the Social Security Administration’s annual cost-of-living adjustment for Social Security benefits is based some sort of index that accurately reflects “official U.S. inflation.” That would be wrong.

You might also think the SSA’s COLA is based on some sort of 12-month year-over-year calculation of annual inflation. That would be wrong, too.

Read my full analysis on SeekingAlpha.com

Charting Social Security COLA

About Tipswatch

Author of Tipswatch.com blog, David Enna is a long-time journalist based in Charlotte, N.C. A past winner of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and was a founding editor of The Charlotte Observer's website.
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