Thursday, October 15, 2015

Cost of Living Adjustment Unchanged in 2016, Contribution Base also Unchanged

by Bill McBride on 10/15/2015 09:10:00 AM

With the release of the CPI report this morning, we now know the Cost of Living Adjustment (COLA), and the contribution base for 2016.

Currently CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). Here is a discussion from Social Security on the current calculation (no increase) and a list of previous Cost-of-Living Adjustments. Note: this is not the headline CPI-U.

The contribution and benefit base will be unchanged at $118,500 in 2016.

The National Average Wage Index increased to $46,481.52 in 2014, up 3.55% from $44,888.16 in 2013 (used to calculate contribution base).  However, by law, since COLA was unchanged, the contribution base will be unchanged in 2016.