Message Font: Serif | Sans-Serif

No. of Recommendations: 0
Roughly speaking, SSI COLAs are based on the change in value between the average of the CPI-W numbers for Q3 of the present year compared with that of the prior year. As you can see below, SSI recipients can be projected to see a 1.38% increase in their benefits come January 2013 if September’s, yet-to-be-reported number declines from that of August to nothing lower than the average of the already reported numbers for July and August.
`	Jul	Aug	Sep	Average	COLA2011	222.686	223.326	223.688	223.233	2012	225.568	227.056	226.312	226.312	1.38%`

OTOH, if Sept’s number comes in the same as August’s, then COLA bumps to 1.49%.
` 	Jul	Aug	Sep	Average	COLA2011	222.686	223.326	223.688	223.233	2012	225.568	227.056	227.056	226.56	1.49%`

But my guess if that an even bigger increase will occur.

There are at least two ways to estimate the CPI-W for Sept. One is to impose a linear regression on a relatively recent potion of the series, such as from Jan 2010 forward, and then extend the trend-line by one month. The other is an averaging technique: compare past August values to past September values over many years and then guess that same, seasonal rate of change will carry forward. A linear regression done in Excel suggests a value for Sept in the neighborhood of 228.350, bumping the COLA to 1.68%.
`	Jul	Aug	Sep	Average	COLA2011	222.686	223.326	223.688	223.233	2012	225.568	227.056	228.350	226.991	1.68%`

The seasonal method offers a slightly lower CPI-W number, something in the neighborhood of 228.023, bumping the COLA to just 1.63%.
`	Jul	Aug	Sep	Average	COLA2011	222.686	223.326	223.688	223.233	2012	225.568	227.056	228.023	226.882	1.63%`

But unless the BLS fudges the numbers downward farther than they have already been doing for the past 20 years, it looks as if SSI recipients will be getting a small increase in their checks next year. (The full data set is below.)

Yeah, today was just one of them days in the bond-market when I "just couldn't get no traction". Nothing looked worth buying, nor even investigating. So I backed up one level and did some financial planning, namely, "With cash being so hard to put to work, did I really need to put it to work?" According to my custom-built, "Retirement Incomes & Expenses" spreadsheet, a male has only a one in four chance of living to age 89. But the combo of my pension and SSI benefits covers my projected expenses until then (assuming an average, 5% inflation-rate and an average 2% SSI COLA increase). So why did I need an income-stream from investments except as backup? And if that were the case, could I cease buying today and just let everything unwind as my bond holdings came due, with never the need to do any re-investing of the cash received from either coupons or maturities? Part of answering that required me to dig into how Social Security COLAs are calculated.

Definitely, it's gotten to be time to do some Fall fishing and stop worrying about this stuff. Que sera, sera.

Charlie
-------------------------------------------------------------------------------------------------
`Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Diff	Oct	Nov	Dec1974	46.9	47.5	48.0	48.3	48.8	49.3	49.7	50.3	50.9	1.2%	51.4	51.8	52.21975	52.4	52.8	53.0	53.2	53.5	53.9	54.5	54.7	54.9	0.4%	55.3	55.6	55.81976	56.0	56.1	56.2	56.5	56.8	57.1	57.4	57.7	57.9	0.3%	58.2	58.3	58.51977	58.9	59.5	59.8	60.3	60.6	61.0	61.3	61.5	61.8	0.5%	61.9	62.2	62.51978	62.8	63.2	63.7	64.3	64.9	65.6	66.0	66.4	66.8	0.6%	67.4	67.7	68.11979	68.7	69.5	70.3	71.1	71.9	72.8	73.7	74.4	75.1	0.9%	75.7	76.4	77.21980	78.3	79.4	80.5	81.4	82.3	83.2	83.3	83.8	84.6	0.9%	85.3	86.1	86.91981	87.5	88.5	89.0	89.6	90.3	91.1	92.2	92.8	93.7	1.0%	93.9	94.1	94.41982	94.7	95.0	94.8	95.2	96.2	97.4	98.0	98.2	98.3	0.1%	98.6	98.4	98.01983	98.1	98.1	98.4	99.0	99.5	99.8	100.1	100.5	101.0	0.5%	101.2	101.2	101.21984	101.6	101.8	101.8	102.1	102.5	102.8	103.2	104.2	104.8	0.6%	104.8	104.7	104.81985	104.9	105.4	105.9	106.3	106.7	107.0	107.1	107.3	107.6	0.3%	107.9	108.3	108.61986	108.9	108.5	107.9	107.6	107.9	108.4	108.4	108.6	109.1	0.5%	109.1	109.2	109.31987	110.0	110.5	111.0	111.6	111.9	112.4	112.7	113.3	113.8	0.4%	114.1	114.3	114.21988	114.5	114.7	115.1	115.7	116.2	116.7	117.2	117.7	118.5	0.7%	118.9	119.0	119.21989	119.7	120.2	120.8	121.8	122.5	122.8	123.2	123.2	123.6	0.3%	124.2	124.4	124.61990	125.7	126.4	127.1	127.3	127.5	128.3	128.7	129.9	131.1	0.9%	131.9	132.2	132.21991	132.8	132.8	133.0	133.3	133.8	134.1	134.3	134.6	135.2	0.4%	135.4	135.8	135.91992	136.0	136.4	137.0	137.3	137.6	138.1	138.4	138.8	139.1	0.2%	139.6	139.8	139.81993	140.3	140.7	141.1	141.6	141.9	142.0	142.1	142.4	142.6	0.1%	143.3	143.4	143.31994	143.6	144.0	144.4	144.7	144.9	145.4	145.8	146.5	146.9	0.3%	147.0	147.3	147.21995	147.8	148.3	148.7	149.3	149.6	149.9	149.9	150.2	150.6	0.3%	151.0	150.9	150.91996	151.7	152.2	152.9	153.6	154.0	154.1	154.3	154.5	155.1	0.4%	155.5	155.9	155.91997	156.3	156.8	157.0	157.2	157.2	157.4	157.5	157.8	158.3	0.3%	158.5	158.5	158.21998	158.4	158.5	158.7	159.1	159.5	159.7	159.8	160.0	160.2	0.1%	160.6	160.7	160.71999	161.0	161.1	161.4	162.7	162.8	162.8	163.3	163.8	164.7	0.5%	165.0	165.1	165.12000	165.6	166.5	167.9	168.0	168.2	169.2	169.4	169.3	170.4	0.6%	170.6	170.9	170.72001	171.7	172.4	172.6	173.5	174.4	174.6	173.8	173.8	174.8	0.6%	174.0	173.7	172.92002	173.2	173.7	174.7	175.8	175.8	175.9	176.1	176.6	177.0	0.2%	177.3	177.4	177.02003	177.7	179.2	180.3	179.8	179.4	179.6	179.6	180.3	181.0	0.4%	180.7	180.2	179.92004	180.9	181.9	182.9	183.5	184.7	185.3	184.9	185.0	185.4	0.2%	186.5	186.8	186.02005	186.3	187.3	188.6	190.2	190.0	190.1	191.0	192.1	195.0	1.5%	195.2	193.4	192.52006	194.0	194.2	195.3	197.2	198.2	198.6	199.2	199.6	198.4	-0.6%	197.0	196.8	197.22007	197.559	198.544	200.612	202.130	203.661	203.906	203.700	203.199	203.889	0.3%	204.338	205.891	205.7772008	206.744	207.254	209.147	210.698	212.788	215.223	216.304	215.247	214.935	-0.1%	212.182	207.296	204.8132009	205.700	206.708	207.218	207.925	208.774	210.972	210.526	211.156	211.322	0.1%	211.549	212.003	211.7032010	212.568	212.544	213.525	213.958	214.124	213.839	213.898	214.205	214.306	0.0%	214.623	214.750	215.2622011	216.400	217.535	220.024	221.743	222.954	222.522	222.686	223.326	223.688	0.2%	223.043	222.813	222.1662012	223.216	224.317	226.304	227.012	226.600	226.036	225.568	227.056	228.023														0.43% average change from Aug to Sep			`
http://www.socialsecurity.gov/OACT/STATS/cpiw.html>

### Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.