Monthly Archives: May 2012

COLA Watch: May 2012

When we first talked about the Social Security COLA in February, the basis of the COLA, the CPI-W, had not risen considerably since the third quarter of 2011. To recap, the 2012 COLA, if there is one, will be equal to the percentage increase of the third quarter average in 2012 over that in 2011 (the third quarter 2011 average CPI-W was 223.23). Through April, the CPI-W has experienced five straight increases, dating back to December of 2011.

If the third quarter average in 2012 ends up equal to the current value, 227.01, a COLA of 1.7% would take effect in December 2012. Alternatively, if the CPI-W continues to increase at the trajectory of the past 5 months, a COLA of 3.9% would take effect in December 2012 (recall that the December 2011 COLA was 3.6%).

A COLA of 3.9% would lead to a $39 per month increase in benefits for someone currently receiving $1000 per month. However, any increase in Social Security may be partially offset by potential increases in Medicare premiums. Of course, no COLA is possible too, if the third quarter average CPI-W is less than or equal to that from 2011. But, no matter how much the CPI-W were to drop, a negative COLA is not possible under current law.

We can’t know for sure how the CPI-W will change as we get closer to the third quarter of 2012. However, we’ll keep you updated on this blog as the numbers come out.



New Online “Your Social Security Statement”

On May 1st the Social Security Administration announced that you can now get “Your Social Security Statement” online.

To get your own personal statement you can go to:

To obtain your statement you must first set up an account. This can take some time as it requires filling out some personal information and verifying some information that the vendor, Experian, has about you. The Social Security Administration acknowledges that some people may not be able to get access to their accounts this way, in which case you can request a paper copy or go to your local Social Security Office to get a statement. Once you set up your account, you can access your statement by using an id and password.

Social Security recently suspended the sending out of Social Security statements, but in February started sending out statements again to people 60 and over and people 25.

The statement has important information for you. It provides estimates of the benefits you can receive if you claim at different ages and the benefits that survivors in your family may receive from your Social Security account. What is still missing is an estimate of what spousal benefits your spouse might receive if he/she claims spousal benefits based on your record. This is a significant omission since there are strategies using spousal benefits which can greatly increase your benefits from Social Security. See our discussion of these Secret Stratagies

Other valuable information that can be found on your statement is your salary history. This history plays an important role in determining your Social Security benefits. You should verify that this information is correct so that you receive all the benefits which you have earned.