When size counts, bring your own ruler

With two months to go in the COLA countdown for January 2016, it appears unlikely retirees will get any adjustment next year. The CPI-W will be announced later ...

If you’re making bets about the size of something, it helps to bring your own ruler.

If precision counts, you want to make sure your definition of precise, fair and accurate prevails. Nobody knows you, and your situation, better than you.   That’s true whether you are a NASA rocket scientist or a retired federal worker living on a tight budget.  Two examples:

  •  In 1999, NASA (that is the taxpayers) lost a $125 million Mars orbiter because government scientists and engineers were using the metric system to measure things. Unfortunately, the contractor NASA hired to do much of the work was more old-fashioned.  It used the English system — feet and inches.  Not a good match.
  • The same principle applies when it comes to measuring inflation.  At least that’s what millions of retired people think each time the government gives them a cost of living adjustment.  Federal, military and Social Security retirees are supposed to get a COLA each January, based on the rise in living costs in the previous year as measured by the Labor Department’s Bureau of Labor Statistics.  To do that, the BLS samples the price rise (or fall) of a market-basket of goods in different cities around the nation. If the index indicates that prices have gone up, retirees get a COLA.

With two months to go in the COLA countdown for January 2016, it appears unlikely retirees will get any adjustment next year. The CPI-W will be announced later this month, but all indications say there won’t be a COLA in January.

Enter the CPI-E. That’s E as in “elderly”. The National Active and Retired Federal Employees Association and other groups have been pushing for establishment of another index to measure inflation for older folks. Just before Congress left for its latest extended, see-you-in-September vacation, Rep. Michael Honda (D-Calif.) introduced legislation that creates the new index, and uses it to measure the impact of inflation on retirees.

The COLA-booster bill has little chance of passing this year.  Or next. In fact, many politicians want to go the other way and gradually reduce the size of future COLAs.

They are pushing for a change that would slightly reduce future COLAs for millions of retirees. Over time, that would save billions of dollars. That’s not going anywhere either since it is, after all, a political time bomb. It would hit everybody getting Social Security.

Both sides —those seeking higher COLAs and those looking to shave them — will resume the battle next year.  In the meantime, and probably for a long time, retirees are going to have to live with what they have which, as far as COLAs go, is likely to be nothing next year.

Nearly Useless Factoid

By Sam Ufret

Back when the whole metric rage was taking place, the French created the Metric Calendar. While a year was still divided into 12 months, each month was divided into three weeks that were 10 days long. Each day was broken down into 10 decimal hours, and each hour was 100 decimal minutes each. Obviously, the idea never stuck, and mandatory use of the system was suspended just three years into its launch in 1795.

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