Really - That's all I get for COLA? - College Planning America

The government has just released their numbers for Cost of Living Adjustments for 2017.
“Monthly Social Security and SSI benefits for more than 65 million Americans will increase 0.3 percent in 2017” https://www.ssa.gov/news/cola/

There are a number of threats or possible “Holes in the bucket” for retirement that we take into account as we plan for both College and Retirement.
Two of those possible threats are:

Inflation
Cost of Living adjustments

When we plan for college costs, we need to add in expected inflation costs. If you have a student in her senior year of high school now, it will be at LEAST another 5 years before she finishes up her 4 year degree.
If the college that she intends attending costs $30,000 today, and we calculate a 4% increase (remember that all UC schools announced a 5% increase from 2015 for the next 5 years), then the total cost for her college over 4 years will not be $120,000, but $132,488. That’s almost an extra half a year of college to plan for at today’s prices. What if we had 2 or 3 students that plan on attending college?

The same principle applies to retirement. As a Financial Advisor it would behoove me to advise my clients to plan for inflation as we put together our overall plan. Average inflation over the past 15-20 years is between 2.2% – 2.4%
This means that if you plan on retiring on $100,000 a year at age 65, then to buy the same amount of goods at age 80, we will need $140,648 in that year.
To hopefully offset the effects of inflation, each year the government announces COLA (Cost of Living Adjustments) to their such as Social Security and how much you can put into your retirement accounts.
Below are the numbers just announced for 2017. The importance of this all is that PLANNING is essential. Both for College AND Retirement.