The Social Security cost of living adjustment has been a hot topic in the news lately.
If you do a quick internet search for the term “Social Security” you’ll find that more than half of the articles are covering the forecasts of the upcoming benefits increase.
It’s no wonder: The upcoming cost of living adjustment will likely be the fourth largest in the history of Social Security.
As interest in this topic has grown, individuals are learning more about how these increases are calculated. And not everyone is happy about it.
Many of the comments I’ve been seeing claim that the numbers are rigged and that the increase in the cost of living won’t even be close to inflation because the numbers will be adjusted explicitly for the purpose of lowering the annual increase.
Some of this skepticism comes from the time period used in how the cost of living adjustment is calculated. While we have the inflation numbers that come out every month, it’s ONLY the months of July, August, and September that are counted for the annual increase to Social Security.
According to some, inflation goes down during those three months, then goes back up again. They suggest that if we used the entire 12-month period of data, we would get a more accurate cost of living adjustment and a larger increase.
So today, I want to tackle this head-on and look at the historical data to answer this question once and for all.