The cost-of-living adjustment will be a lot smaller than the 3.6 percent it was for 2012, according to the institute. It likely won’t be high enough to cover the higher cost of everyday expenses, such as food, utilities, gas and medical care.
The group’s Everyday Price Index shows that prices of frequently purchased goods and services in August were 2 percent higher than a year ago. The cost of food and beverages, for example, increased 2 percent and rose 4.1 percent for medical care.
The cost-of-living adjustment, which is based on the Consumer Price Index for Urban Wage Earners, will be published later this month in the Federal Register, and the Social Security Administration usually posts the information on its website, the Institute for Economic Research said. The Social Security Administration determines the cost-of-living adjustment by comparing the CPI for Urban Wage Earners in the third quarter of this year to the third quarter of 2011.
A positive COLA triggers adjustments for non-retirees, such as the maximum amount of earnings subject to Social Security payroll tax, the Institute for Economic Research said. The maximum is based on the increase in the national wage index and is currently set at $110,100. The Social Security Administration will determine the increase later this month.
Other adjustments tied to changes in the COLA and changes in the average wage index include those for Supplemental Security Income benefits, retirement earnings exempt amounts and the earnings required for one Social Security credit, the report said. The complete list of automatic adjustments will be published in the Federal Register later this month. The Centers for Medicare and Medicaid Services publish Medicare premiums in the Federal Register in early November, the institute said.