Why Social Security Benefits Change Every Year
The Cost-of-Living Adjustment, commonly known as COLA, exists to help Social Security payments keep up with rising prices.
When groceries, utilities, transportation, clothing and other everyday expenses become more expensive, the purchasing power of a fixed monthly benefit can slowly shrink.
COLA is designed to reduce that impact.
The Social Security Administration bases the adjustment on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.
The government looks specifically at inflation data from July, August and September and compares it with the same period used to determine the previous year’s adjustment.
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