Social Security provides retirement income for those who opt in at age 62, reach their full retirement age or extend to age 70. To many Americans, Social Security is a major source of retirement income. However, as Social Security celebrates it’s 80th birthday, it is important to remember that the program was never intended to be the primary source of retirement income. Rather, it was intended to be a program to supplement your retirement plan in the context of the depression.
Imagine if the Social Security Income program did not adjust upwards for inflation. The very first Social Security recipient, Ida Mae Fuller, received a check in 1940 for a whopping $22.54. Clearly, that would not go far today.
Long ago, Social Security increased the monthly payment to Social Security recipients to account for inflation. This is called the Cost of Living Adjustment, (“COLA”). This adjustment, COLA, is contingent on whether the nation’s inflation index, called a Consumer Price Index, indicates that prices have inflated.
This week, Social Security implies that there will not be a COLA increase for 2016. Check out the press release and learn more about the methodology social security uses to make this decision.
This is not good news for residents of the Puget Sound. The obvious flaw in the COLA rule is that each region may have an inflation rate that differs from the national average. For example, the Bureau of Labor Statistics indicates that the September 2014-2015 inflation rate is 1.8%. This, of course, does not speak to each individual of their actual increase in basic costs.
Join me today on 97.7 FM or AM 1000, Komo News Radio, as we discuss this topic!