No, not talking about the soft drink. The COLA we are talking about here is the Cost Of Living Adjustments on Social Security benefits for the upcoming 2016 year
Recently the Social Security Administration (SSA) announced there would be no adjustment to benefits based on a measure called the CPI-W based on changes from 14Q3 through 15Q3. And, because during this time, there was no increase in CPI-W then, by law, there can be no COLA for 2016.
Regardless of the technicalities of the reason, it is obvious why retirees do not like to drink this flavor of COLA: no increase in money in their checks.
But what about current workers toward the higher end of the wage spectrum? What do they care? Actually, these folks relish the idea of forgoing COLA. Why? Because in years when there is no COLA, then the Social Security Wage Base also cannot be raised, and thus will remain at its current level of $118,500 through 2016 as well.
Workers pay 6.2% in OASDI (aka “Social Security”) taxes up to the Wage Base amount, but not over that amount. Prior to the upcoming lack of increase for 2016, the Wage Base had increased each of the 4 prior cycles, and 7 of the last previously. So, understandably, higher wage earners view this lack of COLA (and a stagnant Wage Base) as a refreshing drink they will enjoy sipping…
Author: Ben Hall, ChFC, AIF®
VP & Managing Director – JKJ Retirement Services
Copyright: Except as otherwise noted, the text and graphics provided on Johnson, Kendall & Johnson’s blog are copyrighted by Johnson, Kendall & Johnson, Inc (JKJ). JKJ does, however, permit visitors to make a single copy of information published on JKJ’s blog for their personal, non-commercial use or use within the organization that employs them. JKJ’s name, logos, and trademarks may not be otherwise used by the visitors in any manner without the prior written consent of JKJ.
Disclaimer: JKJ does not assume any liability or responsibility for the accuracy, completeness, or usefulness of the information disclosed at or accessed through the Johnson, Kendall & Johnson blog. Reference in Johnson, Kendall & Johnson blog to any products, services, processes, hypertext links, or other information, by trade name, trade mark, manufacturer, supplier, or otherwise does not necessarily constitute or imply JKJ’s endorsement, sponsorship, or recommendation.