Social Security COLA Is 3.6% In 2012

by Mike Holman

Great news for anyone receiving Social Security (SS) checks or Supplemental Security Income (SSI). You will be getting a 3.6% cost of living adjustment starting in January of 2012. Considering the average Social Security check is $1,082 per month, the average raise will be about $39 per month.

Admittedly, this increase will not likely change anyone’s lifestyle, but that is not the point. Each year inflation erodes your spending power and getting an increase equal to the amount of inflation is necessary in order to ensure that your standard of living does not decrease.

There was no Social Security COLA in 2010 or 2011, so this is the first time SS and SSI recipients have received a COLA raise since 2009, when the increase was a seemingly large 5.8%.

How do I calculate my 3.6% raise on Social Security payment in 2012?

To determine your increase, please check out the article: How do I calculate 3.6% Social Security raise for 2012?

What to do with the extra Social Security money?

This one is easy – nothing. If the official inflation figures match your personal spending, you should be needing the extra money for your regular consumption. If you do have extra money left over, then of course saving it is never a bad idea.

The Social Security COLA is determined by an index called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Bureau of Labor Statistics analyze changes in this index between the third quarter of the current year and the previous year to calculate the COLA increase for the following year.

For example, to figure out the 3.6% increase in 2012, officials look at the third quarter numbers for 2010 and 2011 and figure out the increase.

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