Will SSDI get a COLA increase in 2017? Maybe.

Social Security, and Social Security Disability, receive annual raises known as a Cost of Living Adjustment, or COLA.  COLA is calculated by taking the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of year 1 to the third quarter of year 2, reflecting a COLA raise in January of year 3.  Confused yet?  You're not alone.

The likely answer as of now?  Likely no.

Wait, what????  But January of 2016 saw no COLA, so why not now?  Well, its because January 2016 had no COLA.

Yes, you read that right.

Here's how it works (per The Social Security Administration).  The third quarter of each year is what counts.  So the third quarter of 2016, which is July, August and September, gets averaged, and the same numbers are pulled for the prior year.  If the year over year is positive, then there is a COLA adjustment.  Here is how the 2016 COLA was calculated, and the data is from the link in this paragraph.

So, we're now in 2016, and wondering about a COLA increase to be effective in January 2017 benefit payments.  We can't actually calculate what will happen, because we are just beginning this quarter, but we can guess.

If we take the chart above, and apply it to the prior decade, we should be able to determine this years COLA.  The following is my own work, with data from another Social Security Page.

So, this chart shows that there are two years (2009 and 2015) where there was not a COLA because the year over year CPI-W was not positive.  But wait.....there's more.  The government has a nifty little function that says if a COLA is not utilized due to negative growth, then they get to go back to the last year in which it was a positive, which can actually make the next years numbers lower than actual inflation.

This chart, from this SSA page shows the actual COLA per year.  See how 2007 has a COLA of 2.3, and 2008 of 5.8, in both charts?  Great.  But now look at 2009.  Just the math shows a negative - SSA gives us a zero.  And now, 2010 in the math set shows a positive of 1.5%.  So that should be a COLA of 1.5%, right?  No.  Since 2009 was zero or less, 2010 gets calculated over 2008.  Using my own math again, that calculation shows:

Oh great, a negative.  So 2010 didn't get a COLA, because 2009 didn't get a COLA.  

Now lets look at 2011.  My number, above, is 4.2% based on 2011 over 2010 math.  But we just saw that 2010 didn't get an increase because of 2009.  Will that impact 2011 as well?  Look at the Social Security table (two up from here).  2011 shows as 3.6%.  How is that, when year over year is 4.2%?  We need to go all the way back to 2008, again.

2012, 2013 and 2014 all had gains, so they were "normal" years.  But 2015 was another bad year, economically.  The 2015 over 2014 COLA calculation looked like this:

Now, we need to use all of our historical figures to determine, if we can, what might happen in the third quarter of 2016, producing the COLA figures that will impact benefits in January 2017.  We don't have the CPI-W yet for the second or third quarter.  The first quarter number is up, and we can utilize a year over year on that figure to determine what might happen.  But, the Bureau of Labor Statistics, who is in charge of CPI-W, does produce a file that shows the calculated increase on a monthly basis, and it is available through May 2016, at this website.  So we can't actually go with the right quarter, but we can guess.

OK, lets delve in.  Per the math that we've been doing, the quarter 1 (not quarter 3) 2016 CPI-W, based against the quarter 1 2014 CPI-W, shows an increase of .1%.  But, using the BLS numbers, which are already in percentage form, there is a negative of 4.2%.  Now, my math is likely wrong on the last portion - I may not be analyzing correctly.  So please bear in mind that I'm only human and only giving my opinion!

My opinion is this:  Looking at 2016 compared to 2014, and considering the economy, I don't think that this summer's economic trends will be strong enough to support a COLA increase, for the second year in a row.  I wouldn't put money on it (not that I have any to spend, since this affects me greatly).

Any questions?


PS:  Any and all opinions expressed are entirely my own, with no bearing on the United States Government, Social Security Administration, or Bureau of Labor Statistics.  All facts are subject to error, and again are not the fault of the government if they are in a data set typed by the author.  Basically, I'm posting what I think is right based on what the government publishes, but I don't want to get sued.  Please be nice.  Thank you.