Every year around this time I get a call from a friend asking about what the adjusted cost-of-living figures are likely to be for the next year in advance of the actual announcement from the IRS. He uses these for preliminary layout of those cute little cards you get at conferences with COLAs on one side and a calendar on the other. Mid October, the real numbers are ready and he can confirm and hit the print button. He knows I have a spreadsheet set up to figure this all out based on the BLS numbers that go into the calculation. I, and several hundred other actuaries, do this for fun!
The annual adjustment to the COLA figures in the retirement-related sections of the Internal Revenue Code generally use the average of the CPI figures from the Bureau of Labor Statistics (BLS) for the months of July, August, and September to compare to the set of numbers from the corresponding months from when the original limit was added to the Code by Congress. The rounding rules generally call for big steps such as rounded-down to the last $5,000 multiple. So for most years the numbers are pretty predictable using just the data from July and August. So that said, I can tell you that these key dollar limits will change for 2014 (drum roll):
The BLS has a release schedule for the CPI numbers. The September CPI is scheduled to come out October 16, at 8:30 AM. In normal years, minutes after the release all the number crunchers start crunching numbers and in rapid succession we see releases from the Social Security Administration, IRS, and PBGC telling us what the real numbers will be for the next year. But, alas, shutdown staffing cuts may prevent this from happening – even if the lights go on again before then. Surely, 2014 COLAs won’t be the first thing they think to jump on when they get back.
But don’t worry! I have a spreadsheet! When BLS releases the CPI on October 16 at 8:30 AM, I’ll post the results here – my final numbers have never been wrong, and you should be able to run with those. OH NO! BLS is also a government agency! DRAT-I take back my offer! Like the other agency websites, BLS has a message saying “See you later alligator.” And then it says, “During the shutdown period BLS will not collect data, issue reports, or respond to public inquiries. Updates to the site will start again when the Federal government resumes operations. Revised schedules will be issued as they become available.” I suppose we shouldn’t expect BLS to catch up to the original schedule instantaneously. We will probably endure a few weeks of suspense just waiting for the CPI before the other agencies can respond with their information. So the official 2014 COLAs may not emerge until sometime in November.
Cheer up! We’ll still have the numbers in plenty of time. Remember when the numbers were based on October, November, and December CPI? Now that was a cliff-hanger!
Marjorie Martin, EA, MAAA, MSPA
Principal, Knowledge Resource Center
The postings on this site are my own and don’t necessarily represent Buck’s positions, strategies or opinions.