On several occasions, when playing golf with my good friend and his dad, the dad has joked about how he hasn’t gotten a raise in three years. He’s semi-retired and is getting Social Security payments and his “I haven’t gotten a raise” joke is in reference to how Social Security hasn’t gotten a cost of living adjustment (COLA) in three years. The last time there was a COLA for Social Security was back in 2009, when it was increased 5.8%. The SS COLA is supposed to adjust benefits so they keep on pace with inflation, which seems like a very sensible thing to do, but official inflation figures (CPI-W  is used for SS COLA) has been low these past few years and a 3rd quarter spike in inflation in 2008 (resulting in that 5.8% increase for 2009) gave the COLA a ton of ground to cover, so there has been no adjustment these past few years.
Well, the wait is over, the cost of living adjustment for Social Security will be 3.6% starting in January 2012. That’s the good news. The bad news is that the premiums retirees are expected to pay for Medicare Part B is probably going to go up, thus taking a piece of that COLA bump. That won’t be announced for another month though.
Medicare will cut Social Security’s “raise” in 2012  [Reuters Money]