What Is COLA? The Social Security Cost-of-Living Adjustment, in Plain Words

COLA is a word you will hear every year if you follow Social Security. This page explains what it means, how it is worked out, and when it takes effect. It uses only the Social Security Administration’s own pages.

Short answer: COLA is short for cost-of-living adjustment. It is a change to Social Security and Supplemental Security Income (SSI) benefits. Its purpose is to help those benefits keep pace with inflation, so their purchasing power is not worn away when prices rise.

This page is general information only.

What a COLA is

COLA is short for cost-of-living adjustment.

The Social Security Administration, or SSA, says that with COLAs, Social Security and Supplemental Security Income (SSI) benefits keep pace with inflation.

Inflation means a general rise in prices.

Purchasing power means what your money can buy. SSA states the purpose of the COLA this way: to ensure that the purchasing power of Social Security and SSI benefits is not eroded by inflation. Eroded means worn away, little by little.

Who the COLA applies to

SSA describes the COLA as applying to two kinds of benefits:

SSA also notes that some people receive both Social Security and SSI benefits.

This page does not say who qualifies for either kind of benefit. It explains the COLA only.

How the COLA is calculated

The Social Security Act specifies a formula for determining each COLA. A formula is a set rule for working something out.

Under that formula, COLAs are based on increases in one price measure. The measure is called the Consumer Price Index for Urban Wage Earners and Clerical Workers. It is shortened to CPI-W.

An index is a number used to track change over time. The CPI-W tracks changes in prices.

CPI-Ws are calculated on a monthly basis by the Bureau of Labor Statistics. SSA says the CPI-W is determined by the Bureau of Labor Statistics in the Department of Labor. SSA also says that, by law, the CPI-W is the official measure used by SSA to calculate COLAs.

The third-quarter comparison

The calculation compares two averages. Each average covers three months. Those three months are the third quarter of the year: July, August, and September.

SSA states the rule this way, in substance: a COLA effective for December of the current year is equal to the percentage increase, if any, in the CPI-W from the average for the third quarter of the current year to the average for the third quarter of the last year in which a COLA became effective.

Read that slowly. It has three parts:

If there is an increase, it must be rounded to the nearest tenth of one percent.

Why the comparison does not always say “last year”: SSA’s wording points to the last year in which a COLA became effective. That wording matters in a year after a year with no COLA, because the comparison then reaches back past that year.

When the COLA is announced

SSA states that it will announce the next COLA in October.

That timing fits the calculation. The third quarter ends with September. So the full three months of price figures are not complete until after September ends.

When the COLA takes effect

A COLA is effective for December benefits.

Social Security benefits for December are payable in January. So the changed Social Security benefit is received in January.

SSA’s history page puts the same point this way: after 1982, COLAs have been effective with benefits payable for December, received by beneficiaries in January.

For SSI, SSA says federal SSI payment levels increase effective for payments made for January.

SSA also explains one timing detail for SSI. The normal SSI payment date is the first of the month, and January 1 is a holiday. So SSI payments for January are always made at the end of the previous December.

A short history: automatic since 1975

Since 1975, Social Security general benefit increases have been cost-of-living adjustments, or COLAs.

SSA says Congress enacted the COLA provision, and automatic annual COLAs began in 1975.

Before that, benefits were increased only when Congress enacted special legislation. Legislation means a new law.

The early COLAs worked on a different timetable. SSA says the COLAs from 1975 to 1982 were effective with Social Security benefits payable for June, received by beneficiaries in July, in each of those years. After 1982, COLAs have been effective with benefits payable for December, received in January.

One past example, given as history: SSA’s own history list gives the first automatic COLA, for July 1975, as 8.0%. That is a past figure from SSA’s history list. It is not a current figure, and it is not a figure for this year or next year.

What happens when prices do not rise enough

Sometimes there is no COLA for a year.

SSA’s COLA information page states it plainly: if there is no increase, there can be no COLA.

SSA’s calculation page states the same rule in more detail. If there is no increase, or if the rounded increase is zero, there is no COLA for the year.

So a very small rise in prices can round to zero. When that happens, SSA states there is no COLA for that year.

What this page does not cover

This page prints no COLA percentage for the current year or for next year, on purpose. Those figures change every year. This page explains the idea and the method, which stay the same.

This page gives no benefit dollar amounts. It does not say what any one person’s benefit is, and it does not say what any one person will get.

This page does not decide who qualifies for Social Security or for SSI. For your own record, use SSA’s own notices and SSA’s own site, ssa.gov.

Words to know

COLA: Short for cost-of-living adjustment. A change to Social Security and SSI benefits, meant to help them keep pace with inflation.

Social Security Administration (SSA): The federal agency that runs Social Security and SSI. Every fact on this page comes from SSA’s pages, listed below.

Supplemental Security Income (SSI): One of the two kinds of benefits SSA names for the COLA. The other is Social Security benefits.

CPI-W: Short for Consumer Price Index for Urban Wage Earners and Clerical Workers. The price measure used, by law, to calculate COLAs. It is calculated each month by the Bureau of Labor Statistics.

Bureau of Labor Statistics: The office in the Department of Labor that determines the CPI-W.

Inflation: A general rise in prices.

Purchasing power: What your money can buy. SSA says the purpose of the COLA is to ensure that the purchasing power of benefits is not eroded by inflation.

Third quarter: July, August, and September. The three months whose average CPI-W is used in the COLA calculation.

Sources

Every fact on this page comes from one of these official pages, from the Social Security Administration (ssa.gov). Each was read in full.

Social Security Administration — “Cost-of-Living Adjustment (COLA) Information.” https://www.ssa.gov/news/en/cola/index.html

Social Security Administration — “Latest Cost-of-Living Adjustment.” https://www.ssa.gov/OACT/COLA/latestCOLA.html

Social Security Administration — “Cost-Of-Living Adjustments.” https://www.ssa.gov/oact/cola/colaseries.html

Social Security Administration — “Cost-Of-Living Adjustment (COLA).” https://www.ssa.gov/oact/COLA/colasummary.html

Checked November 2026

This page is general information only.