Social Security COLA Announced For Next Year

Social Security COLA Announced For Next Year

Core Facts

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Remember the advertising campaign for 7-UP that referred to the soft drink as the “un-cola?” Some retirees may be saying the same thing about the Social Security cost-of-living adjustment for 2013 that was recently announced.

Each October, the Social Security Administration (SSA) announces the official cost-of-living adjustment—which is also referred to as a COLA—for the upcoming year. The annual COLA is intended to help Social Security payments keep up with the rising cost of consumer goods and services due to inflation.

A Relatively Low COLA for 2013

The Social Security COLA is determined based on the percentage change in the Consumer Price Index for Urban Wage Earners (CPI-W) from the third quarter of the previous year to the third quarter of the current year. On October 16, the SSA announced that the Social Security COLA for 2013 will be just 1.7%, which is less than half of the adjustment that was made for 2012.

Some seniors are wondering why next year’s COLA will be so low, given the rising cost of many everyday expenses like gasoline, food, utilities and healthcare. One reason is because the CPI-W includes consumer items whose prices are less volatile than gasoline and groceries (like appliances, for example) as well as some items whose prices are actually falling.

As a result of this relatively low Social Security COLA, some retirees may find it more difficult to stretch out their money in order to meet their monthly expenses next year. This is especially true for retirees who live on fixed incomes.

Stretching Your Social Security Dollars

Faced with this scenario, some retirees may simply have to try to adjust their spending and budget. You can get a head start on this by determining what your Social Security benefit amount will be next year based on the 1.7% COLA. Then compare this amount with your projected monthly expenses next year, and look for ways to shave some expenses if the numbers aren’t adding up.

Maybe you’ll need to cut back on eating out or entertainment, or try to cut your grocery bill by clipping more coupons, shopping more carefully or shopping at a discount grocery store. You may also be able to reduce the miles you drive by planning your trips more carefully, and thus reduce your gasoline expenses.

It’s possible that you might have to consider returning to work, even if just on a part-time basis to help supplement your fixed retirement income. Of course, this assumes that you are physically able to work and can find employment. However, this option could turn out to be a blessing in disguise, as some retirees have found that returning to the workforce helps them stay busy and keeps their mind sharp.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates,Inc. (DLA). This material does not constitute an offer or recommendation to buy or sell securities and should not be considering in connection with the purchase or sale of securities. Member FINRA & SIPC.


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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates 1 877 367 5960

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