From the comments I receive on this blog, many people think the calculation of the Social Security COLA is a deep mystery annually influenced by politicians. That’s not so, there is a simple calculation built into the law.
Below is a screen shot showing how the calculation works. This contains an example for last year, but you can just substitute a few numbers and see what is happening in 2012.
First, replace the 2008 numbers in the example with the 2011 numbers in the right column. Then put these numbers in the 2011 column which now becomes the 2012 column: July 225.568, August 227.056.
As soon as the CPI-W for September 2012 is known add it to the July and August numbers, determine the average of the three and you can calculate the COLA for 2013. The number will be available October 15th. Here is where you can find all the CPI-W factors used for all COLAs
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