Understanding Social Security Cost-of-Living Adjustments
Posted on behalf of Dayes Law Firm PC on Aug 11, 2020 in SSD
Most years, a disability recipient can get a cost-of-living adjustment or COLA, which is an increase made to his or her Social Security Disability Insurance (SSDI) or Supplement Security Income (SSI) benefits.
This increase helps to counteract the effects of inflation Social Security recipients face and represents the adjusted benefit recipients should expect to receive for the following year. The average COLA has been approximately 1.4 percent within the past 10 years.
Dayes Law Firm explains the importance of these adjustments, how they are calculated and what the percentage of increase is for this year. The state of the economy plays a major role in determining the annual increase. Overtime, this could potentially impact a recipient’s Social Security benefits over time.
If you need help getting disability benefits, our firm is prepared to help. We offer free consultations.
What Purpose Does COLA Serve?
The whole purpose of a COLA is to ensure that you will be able to buy as much with your Social Security benefits this year as the one you will receive in future years. Due to inflation, the prices of goods and services we purchase tend to increase over time. COLA exists to offset or reduce the effects of inflation so that your benefits do not become insufficient to live on.
How These Adjustments Are Calculated
Every year, the Bureau of Labor Statistics at the Department of Labor helps determine the Consumer Price Index (CPI-W). This index measures the average change in prices over time that individuals pay for goods and services. It is also used by the Social Security Administration (SSA) to calculate COLAs.
To calculate the COLA for next year, the SSA tracks data from the third quarter of the previous year to the third quarter of the current year.
It is important to note that there is no guarantee whether an increase will happen from one year to the next. COLA is equal to the percentage increase in the CPI-W. This means that if there is no increase, then the COLA would be zero.
Social Security payments did not increase in 2010, 2011 or in 2016. In recent years, however, the COLA increase has been above average. The increase in 2018 was 2.0 percent and 2.8 percent in 2019.
Cost-of-Living Increase for 2020
The COLA for 2020 is 1.6 percent for SSDI and SSI benefits. SSI benefits increased monthly for individuals and couples where both spouses are eligible. SSDI benefits increased based on the average lifetime earnings for a recipient before being disabled.
Learn more about other changes to Social Security Disability benefits this year.
Do These Adjustments Happen Automatically?
COLA increases do happen automatically. If the CPI-W increases enough, you could get an increase in your disability benefits. You would not need to reach out to the SSA or submit an application.
The COLA becomes effective in December of the current year and is payable in January of the following year. Social Security payments reflect the benefits due for the preceding month.
Learn More By Calling Our Firm Today
If you need help applying for or retaining your disability benefits, reach out to our Phoenix Social Security Disability lawyers today. We are prepared to guide you through the claims process or help you appeal a denied claim. An initial consultation with us is complimentary and confidential. You are not obligated after this meeting to retain our services, and there are no upfront fees unless we help you obtain benefits.
Dayes Law Firm. Service You Can Trust. Ph: 1-800-503-2000.