COLA Watch

[mickeyd]

MOAA email that I recently received reports that inflation is back and eating away at the 5% deflationary hole that was dug last quarter.

Quote:

The Bureau of Labor Statistics released the January consumer price index (CPI), the metric used to calculate the annual cost of living adjustment (COLA). For the first time this fiscal year, the metric actually increased, at least partially eating away at the 5.0% hole left by months of deflation. Cumulative inflation for FY09 now stands at a -4.5%. The four-month cumulative inflation figure hasn't been this low in the last 40 years. Check out how this year's CPI compares to the last two years. If inflation is negative for the entire year, retirees would see no COLA. The law doesn't allow a negative COLA for military retired pay, SBP, Social Security, etc.

[Boxkicker]

This will be my first COLA year, as I just retired on 31Dec. I really don't care if we get a negative COLA, as our money won't lose anything and we will actually benefit from it vice getting a COLA in addition to $4/gal gas.

I would gladly give up my stopping by for a "COLA" when I can get cheaper gas.

[OAG]

Quote:

Originally Posted by Boxkicker This will be my first COLA year, as I just retired on 31Dec. I really don't care if we get a negative COLA, as our money won't lose anything and we will actually benefit from it vice getting a COLA in addition to $4/gal gas. I would gladly give up my stopping by for a "COLA" when I can get cheaper gas.

You may think differently in 30 years when $1 could have become $3 with the COLA, but remains $1.

[Boxkicker]

Even if retirees don’t get a COLA increase, they won’t lose out. The COLA is designed to maintain retirees’ purchasing power as inflation rises. If the cost of living falls, but retiree pay remains steady, their purchasing power increases.

[ziggy29]

Quote:

Originally Posted by Boxkicker Even if retirees don’t get a COLA increase, they won’t lose out. The COLA is designed to maintain retirees’ purchasing power as inflation rises. If the cost of living falls, but retiree pay remains steady, their purchasing power increases.

Of course, there's the *real* change in the cost of living and what the government says the change in the cost of living is. But I digress...

[Koolau]

Quote:

Originally Posted by ziggy29 Of course, there's the *real* change in the cost of living and what the government says the change in the cost of living is. But I digress...

Only too true, Ziggy. However, having lived without any official COLA for 35 years (first 5 years of wo*k - I had one) I'm sorta looking forward to a COLA'd ANYTHING! Even if it's not the "real" thing, it's better than my pension which has no COLA.

In fact, I'm sorta looking at SS as my pension's COLA. How sad is that? But YMMV.

[Nords]

Quote:

Originally Posted by mickeyd MOAA email that I recently received reports that inflation is back and eating away at the 5% deflationary hole that was dug last quarter.

So, all of the stimulus programs are succeeding beyond our wildest dreams?

[BLS53]

I've already conceded not getting a COLA this coming fall. The indexes were high last year, and have been falling until this month. It would take some big increases to get above the Jul-Aug-Sep numbers from last year.

The upside is the numbers will probably look good in 2010, if this year remains low.

[bruce1]

Quote:

Originally Posted by ziggy29 Of course, there's the *real* change in the cost of living and what the government says the change in the cost of living is. But I digress...

This is one of my concerns. I have planned for a 1.5% to 2% COLA creep or is that a leak in my pension.

Bruce

[BLS53]

Quote:

Originally Posted by bruce1 This is one of my concerns. I have planned for a 1.5% to 2% COLA creep or is that a leak in my pension. Bruce

The trick is to live in an area with a CPI that lags the national average.

Not everyone can, or will, do that I suppose.