Last week, the Social Security Administration announced that there will be no annual cost-of living adjustment on Social Security payments for 2016. Retirees saw a 1.7 percent adjustment to Social Security in 2015. This is only the third time in 40 years that Social Security payments have not been increased.
Social Security payments are tied to the Consumer Price Index (CPI). The CPI is based on an assessment of inflation from the Department of Labor. This number is being held constant, largely due to lower gasoline prices.
Some employers use Social Security increases and CPI to make decisions with respect to bonus, compensation and benefits costs. Employees might prepare for lower cost of living increases next year.