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Social Security COLA 1.1% increase ‘iffy’ in 2018

July 8, 2017

Start praying now for a substantial rise in Social Security benefits. Last year, I got maybe $1.37 between my father’s retirement from SSA and his Veteran’s benefits. I subtracted what I got in 2016 and the new ‘supposed’ increase this year. It was absorbed by higher Medicare costs, more than a ten dollar increase due to Obama Care, which still hadn’t been repealed at this time.

That three percent across the board raise is counted on by all Americans who live on a fixed income. Since Barack Obama put a two-year freeze on COLA for everyone receiving Social Security in 2010, that percentage is dwindling every year after. One article said to expect a 1.9% increase, but the way it looks now, every SSI/SSA beneficiary might get 1.1%. Sounds iffy to get 1.1%.

Part of the problem with the lower COLA percentage has a lot to do with the surplus in the oil market. This glut drastically reduces prices and is global.  OPEC exports were 2 million barrels per day (bpd) higher in June than in 2016, despite of an extension of a 1.8 million bpd production cut deal led by the Organization of the Petroleum Exporting Countries.

Reuters oil data showed OPEC production is now at the highest level this year. Russia, which is cooperating with OPEC in a deal to stem production, said it was ready to consider revising parameters of the deal if needed. Because of their involvement in Syria and Ukraine, this deal with OPEC boosts their economy, so this should be interesting, to say the least. A group of oil-producing countries monitoring the deal will meet on July 24 in Russia, when they could recommend adjusting the pact. Let’s hope that happens.

Federal and postal retirees get COLAs each year, if the cost of living as measured by the Bureau of Labor Statistics’ CPI-W yardstick shows living costs in the current year’s third quarter (July, August and September) are up over the previous year’s third quarter. This didn’t happen all the time. In 2008 and 2009 this third quarter difference dropped, resulting in no COLA increase in 2010.

This year (January 2017) retirees got a tiny 0.3 percent increase. Many who didn’t follow the news (most do) weren’t aware they got an increase because, with higher health premiums coming out of their annuity payments, there wasn’t much to notice. My Social Security check remained the same as last year. Most of the time, COLAs didn’t factor in inflation. Everything went up except my check.This blogger still wondered how the lower gas prices affected our SSA raise. Remember the measly $1.37 raise in my VA check?

In a way, this ‘measuring stick‘ they use to determine the percentage everyone gets is not fair, because retirees under the old CSRS program didn’t have inflation factored into their raise. Those retiring under the new FERS system at least get inflation costs, but only if it rose above two percent. The last big increase occurred in 2009 where the new retirees under FERS got 5.8%.

Just like everything else put on hold in Washington, this is no surprise to me that we all have to wait till mid-October for our small government increase. Prayer is good right now.

 

 

 

Sources:

Lower gas prices mean no Social Security increase next year

Oil prices slide on rising global crude supplies

Putin’s dangerous game

2018 pay raise vs. COLA — and the winner is …

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