Title II Cost-of-Living Adjustment (COLA)
Here is a handy table of the annual COLAs that have been applied to Title II benefits since December 1983 (when COLAs moved from June to December).
Be careful: The COLA is applied in December of each year, but affects the Title II benefit paid in January. So the “2008 COLA” affects payment received in 2009- a potentially confusing point. Look below the chart for a practical example.
| December | Percent |
|---|---|
| 2009 | 0.0 |
| 2008 | 5.3 |
| 2007 | 2.3 |
| 2006 | 3.3 |
| 2005 | 4.1 |
| 2004 | 2.7 |
| 2003 | 2.1 |
| 2002 | 1.4 |
| 2001 | 2.6 |
| 2000 | 3.5 |
| 1999 | 2.5* |
| 1998 | 1.3 |
| 1997 | 2.1 |
| 1996 | 2.9 |
| 1995 | 2.6 |
| 1994 | 2.8 |
| 1993 | 2.6 |
| 1992 | 3.0 |
| 1991 | 3.7 |
| 1990 | 5.4 |
| 1989 | 4.7 |
| 1988 | 4.0 |
| 1987 | 4.2 |
| 1986 | 1.3 |
| 1985 | 3.1 |
| 1984 | 3.5 |
| 1983 | 3.5 |
*The original COLA increase announced for December 1999 was 2.4%, due to an error by the Bureau of Labor Statistics. The correction required a one-time “catch up” payment during 2001 to millions of Title II beneficiaries and SSI recipients.
Full Benefit & Coverage Changes:
Early Retirement: Benefit Impact as Full Retirement Age Rises
Working Backwards: Here is typical language quoted from an Award Notice issued in 1999:
Your past-due benefits are $21,344.00 for April 1997 through January 1999. You will receive $16,008.00 around February 10, 1999. We withheld $5,336.00 from your past-due benefits to pay your lawyer. If we are not asked to review the amount of the fee, we will pay your lawyer $4,000 from the benefits we withheld. We will pay you the balance of the amount we withheld.
What are the client’s monthly benefits rates for 1997, 1998 and 1999? It is common for Award Notices to omit a breakdown for earlier years, and the current rate for ongoing benefits may be missing as well. Algebra to the rescue:
Start with the first benefit rate, payable in April 1997, and call it X. Looking at the 12/97 COLA in the table above, we know the 1998 rate was (1.021)X. There were 2 COLAs applied to get the current 1999 rate, and we simply multiply them together: (1.021)(1.013)X = (1.034)X
The 1997 rate applied for 8 months: 4/97 through 11/97. The 1998 rate applied for 12 months: 12/97 through 11/98. Finally, the lump sum includes 2 months at the 1999 rate: 12/98 and 1/99. So now we are ready to solve for X:
(8)X + (12)(1.021)X + (2)(1.034)X = 21,344
(22.32)X = 21,344
X = $957
So the answer is: $957 in 1997, $976 in 1998, and $988 in 1999.
Also Note: The COLA table above gives you the annual January increase in the federal portion of the SSI benefit. The same caution applies: The December 2004 increase in the chart first affected SSI payments in January 2005.
