2012 COLA (Cost of Living Adjustment) Set to Increase by 3.6% For Social Security Recipients

[Updated for 2012 Social Security changes] The official 2012 COLA (cost-of-living adjustment) increase is 3.6%, as announced by the SSA. This will mean increased payments to social security recipients, federal employees (in 2013) and other groups whose pay/benefits are tied to COLA. The 2012 COLA increase would be the first in two years and is a much needed boost for millions of Americans.

As described in the updates below, COLA is determined each year by the increase, if any, in the third-quarter CPI over the index level a year earlier. The 3.6 percent increase is based on based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2008 through the third quarter of 2011.

Other key changes to Social security in 2012 are:

– Maximum taxable earnings subject to social security (wage base) will increase from $106,800 to $110,100. This will mean that about 10 million of the 161 million eligible workers will pay higher taxes as a result of the increase in the taxable maximum.

– The maximum Social Security Benefit for a worker retiring at full retirement age has risen substantially from $2,366/mo. to $2,513/mo.

2012 Social Security Changes from COLA Increase
Source : SSA.gov

– Earnings needed per quarter to qualify for social security coverage have risen fron $1,120 to $1,130.

– Retirement earnings test exempt amounts increase from $14,160/yr to $14.640/yr for those under full retirement age

– The SSI Federal Payment Standard have increased as follows: Individual $674/mo. to $698/mo; Couple $1,011/mo. to $1,048/mo.

– SSI Resources limits are unchanged

– SSI Student Exclusion has increased in 2012: Monthly limit will rise from $1,640 to $1,700; Annual limit will rise from $6,600 to $6,840

– Social Security Disability Thresholds have also increased slightly : Substantial Gainful Activity (SGA) for Non-Blind has risen from $1,000/mo to $1,010/mo, versus $1,640/mo. to $1,690/mo.for the blind. The Trial Work Period (TWP) threshold remains unchanged.

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[Update Oct 2010 – No Social Security Increase in 2011 With Zero COLA Adjustment] It has been confirmed. The SSA confirmed that monthly SSI payments to nearly 60 million Americans will not increase in 2011. Here are some more details from the official press release:

The Social Security Act provides for an automatic increase in Social Security and SSI benefits if there is an increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a cost-of-living adjustment (COLA) was determined to the third quarter of the current year.  As determined by the Bureau of Labor Statistics, there is no increase in the CPI-W from the third quarter of 2008, the last year a COLA was determined, to the third quarter of 2010, therefore, under existing law, there can be no COLA in 2011.

Other changes that would normally take effect based on changes in the national average wage index also will not take effect in January 2011.  Since there is no COLA, the statute also prohibits a change in the maximum amount of earnings subject to the Social Security tax as well as the retirement earnings test exempt amounts.  These amounts will remain unchanged in 2011.

The Department of Health and Human Services has not yet announced if there will be any Medicare premium changes for 2011.  Should there be an increase in the Medicare Part B premium, the law contains a “hold harmless” provision that protects more than 70 percent of Social Security beneficiaries from paying a higher Part B premium, in order to avoid reducing their net Social Security benefit.  Those not protected include higher income beneficiaries subject to an income-adjusted Part B premium and beneficiaries newly entitled to Part B in 2011.  In addition, almost 20 percent of beneficiaries have their Medicare Part B premiums paid by state medical assistance programs and thus will see no change in their Social Security benefit.  The state will be required to pay any Medicare Part B premium increase.

The Social Security Contribution and Benefits base also remains unchanged in 2011 at $106,800. This limit, also referred to as the Social Security’s Old-Age, Survivors, and Disability Insurance (OASDI) program limit, is the amount of earnings subject to taxation for a given year. The OASDI tax rate for wages paid in 2011 is set by statute at 6.2 percent for employees and employers, each. Thus, an individual with wages equal to or larger than $106,800 would contribute $6,621.60 to the OASDI program in 2011, and his or her employer would contribute the same amount. The OASDI tax rate for self-employment income in 2011 is 12.4 percent.

CNN reported earlier that chances are high that for the second year in a row Social Security beneficiaries will see no increase in their SSI benefits. Analysts say there just hasn’t been enough inflation to justify a bump in benefits. But the official word won’t come until later this month when the Social Security Administration (SSA) announces whether there will be a cost-of-living adjustment (COLA) for 2011.

The last time there was an inflation adjustment was in 2009: Social Security beneficiaries got a higher-than-normal 5.8% increase because of a temporary spike in energy prices in the third quarter of 2008. This year, there has been some inflation, but prices still are lower than they were in the third quarter of 2008 — and that’s the quarter that counts. By law, the SSA is required to track inflation using the most recent third quarter that led to an adjustment. So the 2011 decision will be based on the change in inflation between the third quarter of 2008 and the third quarter of 2010. (see update below for calculations).

The CBO in August said it expects beneficiaries will not receive a COLA in 2011, and will receive only a 0.4% increase for 2012. If the CBO is right, that would mean a monthly Social Security retirement check of $1,170 — the average among current retirees as of June — would be the same next year, and rise by about 5 bucks in 2012.

SSI recipients got a one-time bonus payment of $250 in 2009 as part of Obama’s Stimulus package and were expecting to get one in 2010 (given a COLA increase was unlikely). However, Congress has held up bills on this payment and one is unlikely this year

There’s a bit of bright news for high-income earners still working: If there is no COLA for 2011, that also means there would be no increase in the amount of earnings subject to the Social Security tax, which is currently assessed on the first $106,800 of a person’s wages.

Even if the inflation math is correct, the idea of another year without a pay hike isn’t likely to be popular with the nearly 58 million people who receive Social Security retirement, disability or supplemental income benefits, particularly those who may face higher Medicare premiums.

But critics of the extra payments pointed out that Social Security benefits are intended to maintain purchasing power — which by the inflation measures used they have. And, they noted, benefits don’t decline when prices decline, which happened in 2009.


[Updated Aug 2010] The BLS reported that the July Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) was at 213.9 (1982-84=100). The CPI-W is a subset of the headline  inflation number (CPI-U) which covers households of wage earners and clerical workers. The CPI-W is a key inflation index because it is used to determine the Cost of Living Adjustment (COLA) that drives increases to a number of government and retiree benefits like Social Security.

The Cost of Living Adjustment (COLA) is based on the average CPI-W for the three months in Q3 (July, August, September) and compares to the average for the highest preceding average of Q3 months. In 2007, the average of CPI-W was 203.6. In 2008, the average was 215.5. That gave a COLA increase of 5.8% in 2009. In 2009, the Q3 average of CPI-W was 211. That was a decline of -2.1% from 2008. However the adjustment can never be negative by law – so that’s why there was no COLA increase in 2010.

Because the current CPI-W is still below the 2008 level (215.5), which was the highest preceding third quarter, there will probably be no 2011 COLA increase this year unless inflation spikes in August and September.  I see this highly unlikely given the low growth and recessionary environment we are currently in. However it is likely, due to the fact that we are in an election year that some legislative action will take place to push through an increase. Already some  House and Senate members are proposing draft bills to alter the current COLA rules which prohibit an increase in the contribution and benefit base if COLA is not greater than zero.

A COLA increases a person’s Social Security retirement benefit by approximately the product of the COLA and the benefit amount. The exact computation, however, is more complex. Each Social Security benefit is based on a “primary insurance amount,” or PIA. The PIA in turn is directly related to the primary beneficiary’s earnings through a benefit formula. It is the PIA that is increased by the COLA. For example, if the initial PIA is $1,206.50 and it is increased by a 5.8-percent COLA, the new PIA would be $1,276.40

The Social Security Act specifies a formula for determining each COLA. In general, a COLA is equal to the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of one year to the third quarter of the next. If there is no increase, there is no COLA. (source: SSA.gov)

The August 2010 CPI numbers are scheduled to be released on Friday, September 17, 2010, at 8:30 a.m. (EDT), and are sure to be closely watched by many SSI recipients.

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40 thoughts on “2012 COLA (Cost of Living Adjustment) Set to Increase by 3.6% For Social Security Recipients

  1. my issue is that with the small increase we recieved in SSD now they say I am $4.00 over the budget and I have lost all of my medicaid most of my doctor’s as well as RX’s are covered by this and I was only given a 10 day notice. I am single! OH YAH they said if I had a kid or get pregnant I can get it back (I have a brain tumor) now I will die without treatment and they do not care and all of the clinics are capped in my state!!! ONE CASEWORKER TOLD ME TO GET KNOCK UP IS THE ONLY WAY LOL~~~~

  2. Yeah, right — big deal! It’s going to amount to zilch because, “Some of the increase in January will be lost to higher Medicare premiums, which are deducted from Social Security payments. Medicare Part B premiums for 2012 are expected to be announced next week, and the trustees who oversee the program are projecting an increase.” I’ve been on Social Security for five years now and every time we got an increase it was all but wiped out by a raise in Medicare premiums. Then, of course, supplement­al and Part D premiums, go up, leaving us seniors absolutely no better off than we were before the so-called increase!

  3. These complaints that you all have is valid and I agree with some of them, but the new President inhereited this mess from a drunk president who did nothing but deny help to all the disasters because he did not want to pay attention to any one else in his cabinet. His response was slow but when another disaster came up he had them evacuate sooner and I dont need to say or mention who stayed in those areas. We as people know that the US prints money everyday and destroy old currency everyday and make the poor pay more in taxes and the rich pays less, but one thing they at the top has forgotten is that we the little people without funds are the ones who make them at the top get all there riches. I have learned something about what power the President has and that is none, he can’t veto without the senate, the congress and they are all fighting a racial problem with the man skin color and trying to make his term the worse in history, but never mine he did not cause all these poverty, banks bailouts, housing, and wall street giving their selves raises, it was in effect before he came into office. If we could all up in Washington, pull together and get the people who voted them in on their mind, and the situations of no jobs and people losing jobs daily and cant even afford to get sick then we can eliminate this problem but there is too much I cant let you win and you lose mentality up there and too much high school rivarly. May God Bless You and Get Us Out Of this Mess and place all our enemies under our feet as footstools………………….

  4. Yeah once again the ones that are retired and the ones that are really disabled are screwed while the onces that are in office gets a big pay rise once again. their pay needs cut down to what a person on ssi gets which is 674 a month and lets see if they can pay their bills raise two kids and one on the way and have money left over after doing to buy things like cloths, gas for the car, or even cleaning supplies. i know that it is not possible to do that cause i am my husband lost his job and we have two little boys and our son was born disabled and the only form of income we have right now is his ssi check cause in the town that we live in there is no jobs and it is hard to make 674 last all month

    1. I totally agree with you!!! And they never give any help to the parents who are disabled AND have disabled children. Many workers are abusing the EIC(Earned Income Credit) from having many kids and/or having low paying jobs. My husband is on SSDI and our son is on SSI Disability(only child). I the mother does not qualify for medicaid as I’m disabled too. I had to stop going to the clinic(not free) because I can’t afford the gas, medications and fees. And no, there no public transportation where we live. And now our food stamps are being cut off because I’m not under a doctor’s care. Either that or work. I am diabetic with heart problems, swollen legs….. No employer is ever going to let me go home or even lay down when I need to. So, we’re losing our food stamps now!!! Also, my son’s medicaid refused to pay for one of his needed medications. Which is about $150 for a month supply. I see alot of the EIC’s buying things that are not needed. What about us disabled parents!!!!

    2. My husband is retired and I work from home. We live as cheaply as possible. Grow a garden, catch rainwater, dug a well, drive an old truck he can work on himself. I sew a lot of our clothes and cook and bake from scratch. We heat our home with wood. We manage to actually have savings every month.
      But I am curious how people who live on SSI and SS would say they can barely afford to live on what they have, and still have even more children.
      I had two kids, years ago and was able to afford them. Things did get tight at times, but I managed. However, in these economic hard times, I could never see my way clear to bring another child into this, especially if I already could not afford the ones I already have.
      Just does not seem fair to the whole family. Birth control is WAY cheaper than another child.
      I would suggest seeing about taking some english classes, and finding ways to make yourself more employable.
      Get rid of any pets, car pool to Dr. appts, cook from scratch, trade babysitting with another family, use your library for entertainment (books movies and music), go to couponing sites online, match coupons with weekly sales, grow food, sell anything in the house you do not need.

  5. i think we all know where the 250.00 went in 2011 obama lauden to fund his wars and to force the sick and retired to a early grave this is not about if the usa can afford this payment its like vietnam our men sent there for population down size if olama ben laeden can make it where you can not get medications you need to stay alive or to be able to eat a good meal wow there it goes get the bastard out of the white house i know better niggers that has been inside there but he is the lowest scum there is everyone please do not vote for this crook again but i know most will history has been made piss on history i read the peoples words here and makes me sick stand up demostrations get noticed speak out i send mail to the bastard wonder why never hear back he is stealing from the people a form of political rape to this country inpeach him now he is a crook robbing the old and disability people that worked hard to fund his pockets and the other crooks in washington pisses me off served my country 23 years for what look at him he is half black but notice he also looks like mohammars sons maybe he is as far as i can say he is a no better then mohammar like father like son get started people and stand up to him he is just another crook you elected i never voted again nobody worth it

    1. Obama has nothing to do with the cost of living increase for social security.It is judged by inflation.Increases are approved by Congress.Your hate for Obama is so strong that you will lie to make a point.I can understand why you did not get a reply from your email,which was probably a disgrace.Where ever you got your misinformation makes you sound like a complete idiot. Your 23 years of service was a fraud. You are a shameful excuse for a human being that has ever walked the earth.

  6. I’m on disability it is very hard for me to make it .i dont ever have enufe to pay bills or even go to a used clothing store to get close to ware. and do you really think the goverment cares? when thy set and pay 200 dollers for a plate of food.We are the USA we have gods childern going huggry the old under cared for .my mom is 78 disable and lives in oklahoma the poorest state i have ever seen she cant even get good care or good food .ow thy will give her 10 dollors of food stamp. but thats all the help she can get what is going on?THE POOR GETS POOR THE RICH GET RICHER. GOD HELP US ALL.GOD BLESS YOU ALL

  7. Just a quick line or two.Sure the Government doesn’t care about people that retire,or on Medicare or disability,they are in a different world. Iget pissed off cause many people retire,then in months or a yr or two,They may pass away n the widow gets 250.00..But how do the elderly live?.Plus they can’t get any help.Look at all the robberies and killings.People are fed up.The way we’re going some country is goinna press the button, and all are dead,except the politicians, they all have a spot for their family while we all cook..

  8. barocka obama will seniors disabled ever get another 250.00 or a raise in there social security social security wouldnt be going broke if you and the house would cut out alot of the medicade program and put it into the medicare program it would save social security for years to come get these well abled bodys that arnt really disabled who played dom and crazy just to get a ssi disabelity check and there is nothing wrong with them i am disabled i had to get a lawyer to get mine i have more disabelity sence i got on disabelity a lot of us on social security social security disabelity just can make ends meet 250.00 or a raise every year sure would help a whole lot love you your family and white house staff work with obama let him pass what needs to be passed god bless all of you let obama do what needs to be done

    1. Sandra, I read up until the point were you said cut down on medicaid and froze and had a “WTF is she on about!?! Is she crazy!?!” Moment. I am mentally and physically disabled and need medicaid and SSI to hear you say, “cut out alot of the medicade program…” is like saying, “Suzzie, I hate to say it, but your insurance won’t cover your operation, so lay here and die because we cannot afford it.” I am recieving medicaid and to hear that was like you were offering me a death sentence because with out my pills I just might have a psychotic break and kill myself and medicaid is the only way for me to afford them. If anything he should stop sending or lessen the sending of troops and funds on his “holy crusade mission” to Iraq and bring our men and women that are fighting for a lost cause home because we shouldn’t be over there forcing our ways upon another society. If he did that that would save hundreds of millions of dollars right there, if not billions. So, don’t go off and think about all the old people and just your group and say we should cut out aid for everyone else, the younger people that need it too without thinking of another option or two of where to cut back on first, ok?

  9. Our military really serve our country, not the bloodsucking parasites called congresspersons. No congressperson should make any more money than a soldier. They should get the same pay, same medical care and eat at White house mess halls that provide the same food our soldiers get.
    If we did this we would get people who really want to serve our country.

    1. The bloodsucking parasites that you mentioned do not give one good DAMN about you and your family they think that those millions of dollars will buy their way into heaven but it will simply stoke the flames of hell a lot hotter on them so let them keep hoarding that money! KEEP YOUR FAITH IN GOD AND GOD WILL DEAL WITH THEM

    2. I am of the opinion that ALL congress and senate persons. state and federal, should draw minimum wage income. That way you would know that are working for the good of the people and are there because they believe that they can make a difference and not to line their pockets and live a lifestyle with no worries about making a choice of whether they will do without food so they can buy their medications, buy clothes at a thrift store instead of treating themselves to a new outfit occasionally. I have worked all my life and am now disabled and cannot make ends meet. How are you living Mr. Congressman/Senator?

  10. This is my first year to have medicare taken out and a supplement. I can hardly afford my bills now much less having to take out almost 270 from my check. This is a shame. I have worked all my life and depend on social security and my little pension and now that I need help to start my medicare there is no raise. People like me who have helped their children and have looked forward to retiring with social security and a small pension need to be thought of as well as those elected officials who do not have to scrape for every penney. We need a little help,.

    1. your comment rings true to all retired americans! so therefore vote out all the old theives and vote for a whole new batch of thieves

  11. As usual we are so busy helping everyone else on the face of the planet we just can’t afford to take care of our own people right here at home makes you wonder what the U.S. census had to say about how many people are not living in there homes any more because they lost them or how many people are living with family or freinds because they lost their homes or even shelters for that matter I would be willing to bet they have had a record 2 years in visitors but yet our goverment sees fit to spend trillions to help others that don’t even live here and we are apparently the riches nation in the world what a joke by the time our goverment is done with us there will only be the super rich and the very poor unless we elect people to make real changes for the people and not for their personal agendas


  12. All those greedy bastards care about is taking our money and making sure they get there 18% raises the average working person never sees an 18% raise in there life time but it is ok to hire a team of analists to say oh there has not been a cost of living increase in the past 2 years but if one of these idiots walked out on the street and tryed to rent a apartment pay health insurance pay for perscription drugs car insurance home insurance groceries and everything else it takes to live in the land of the free home of the broke (exept the politicians who line there pockets with our tax money and bribes) they would see that it is a hell of alot more expensive to live here than it was in 2009 if you ask me all of our goverment officials should be volenteer workers that way the money the people put into the system it will be insured that they will get it back out just seems like they always find a way to cheat us but as long as we keep paying for them to live large its ok which is compleat B.S. Obama needs to put a permanent freeze on raises for the senant and congress


      1. What about the rest of the politicians ?How many of them know how to live with min wage.You have the misconcepetion that Pres Obama had an easy life,you must be nuts.Read the facts,although you probably do want the facts because you want to BELIEVE your LIE.

  13. All of the above arguments are excellent.Retired people are on FIXED INCOMES and congress (especially Republicans) don’t seem to understand this, or as it is really know don’t give a damn about us. I am still appalled by the fact that american voted these money sucking slimeballs back inot power to do more damage to us. A flat tax is the answer,but we know this is never going to happen. I fear in the near future when the have-nots reach rock bottom there is going to be a bloody revolution to return this country to some sort of normalacy.(please excuse spelling, my spell checker is on hiatus. I am amazed that in 65 years our country has turned into the cess-pool that we now view every day. Well enough of my raving. I wish everyone well out there except greedy congressmen.


  14. i think all the ones that say we dont need help , they need to try to live on 600.00 a month and have to buy food , cloths, electric, rent , gas, ect.. and see how they like being told we dont need any money to help us,,,,, they could use some of their money to help the poor out, they need us we it gets time to have votes to keep their butt in office , i hope they dont get it , if they gonna treat people like they do …. why make them richer when we have to try to live everyday the best way we can ….. just remember god see all you do in your life time ……..i would love to come and visit you and sit in your nice office and wear your nice cloths and eat a nice dinner instead of what kind of roman noodles it will be for dinner tonight …lol….. but dont worry yourself i know you want anyway,,,,,, like you all have a heart …..

    1. this government has screwed the american people long enough its time we FIGHT BACK

  15. I do not belive that the Congress or the Senate cares about the peopel on Social Security they will give them self a raise regardless if the old folks have food on there tabel or not, as long as they have there share. We pay for there Car there Insurance and for there Retirement. I think they should just give us the pill and we save social security. Living goes up food prices going up gasoline going up Medicne goes up so what is left when you only get 1200 dollars a month, I would like to see one of our Senators to live on 1200 dollars a month. The 250 Stimulus they want to gie us is 20.83 dollars a month or 5.21 dollars a week that wont pay for a hamburger.

  16. barocka obama senior citzens like my step grandmother have worked all of there life to see there social security i im disabled on social security disablity with a seasonable part time job i am getting tired of congress taking money from our social security to pay for these baby boomers i have worked all of my life december 6 2010 i will be 54 years of age you and congress need to cut the medicade bill out and put it into the medicare bill plus cut out ssi give those who are really sick a social security disabelity check let jobs take care of these young girls not the govermentdo away with the medicade bill put it into the medicare program it would save social security for maney years to come the end



  18. There’s something wrong with a system that denies Cola’s to seniors while politicians try to wiggle out of returning to previously (higher) tax rates for high-income people. There’s also something wrong with returning to 50% tax rates on inheritance, or higher taxes on investment earnings. In other words, our entire system of taxation is wrong, especially in view of the many loopholes created when the wealthy cry “Foul!” The flat tax, no exceptions, is the way to go, but this country will never do what’s right by the less fortunate….it’s not profitable.

  19. The Social Security System is based on pepetual motions, and is doomed. The laws of physics do not allow it, why should the Govt. I strongly believe you should only get out of it, what you have put into it. This means it should never be considered a place to barrow from, because it is not theres to barrow.

    I think everyone that has contributed to it should have the option of pulling everything they have in it, out everytime there is a descision made as to the direction it is going. Just like you would if your mutual fund, or other invest like a stock option were to quit paying dividends. When this happens there is an option to the individual to sell what he or she has or take what they have and put it in other plan that meets what there long term goal is. Why should this money be treated any differen

  20. The last stimulus I received in 2008 for $200.00 they took it back out of my income tax refund and than raised my taxs by $20.00 a month. I collect windowers SS which was only $500.00 a month now because I go on medicare at 65 yrs old their taking out $110.00 a month from my SS Check. Thanks for all the help

  21. They didn’t give us an increase in our Social Security but it didn’t stop them from jacking up our Medicare deduction so I wound up as a negative growth! Our cost of living continued to increase, too. If all of my expenses go up and my income stagnates where the heck does that leave me at 85?
    Another year like this one and we’ll be living under a bridge somewhere.

  22. The real reason that seniors recieved no C.O.L.A. For 2010, was likely payback for the way they got in the faces of politicians at town hall meetings last summer. (If you remember, it was anounced a month or so after the summer ruckus.) They don’t like it when the great unwashed masses challenge them. After all, the know what’s best for us, and they’re gonna give it to us down our throats if they have to. November’s comming!

  23. Great, we keep losing our entitlement so that the Wall Street banks can get more bailouts. I am sure they are loving low inflation where their million dollar bonuses can buy more ferrari’s…..

  24. What will be interesting to see is if Medicare premiums and deductibles rise without a in kind adjustment to SS. Usually this is what happens, any increase in benefits are usually taken (and sometimes then some) by rises in Medicare premiums and deductibles so the end result is for the individuals is the the same payout while energy, food and other expenditures not calculated factored in the CPI also rise. What a racket.

  25. One approach would be another one-time payment of $250 like they did last year. Thought that’s what they were going to do this year. So once again retirees are going to get screwed.

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