Social Security raises your benefit amount once per year, based on inflation measured by the Consumer Price Index

Every October, the Social Security Administration announces a Cost of Living Adjustment (COLA) that takes effect the following January. This adjustment raises the monthly benefit amount for everyone receiving Social Security — retirees, disabled workers, and survivors. The size of the raise depends on how much inflation happened over the past year. If inflation was high, the raise is larger. If inflation was low, the raise is smaller. In years with no inflation, there is no raise.

You do not need to do anything to receive the raise. It happens automatically. The new amount appears in your January payment, and the Social Security Administration sends you a notice in December showing the new figure.

The COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures price changes for food, housing, transportation, medical care, and other goods and services. The Social Security Administration compares the average CPI-W for July, August, and September of the current year to the same three months from the previous year. That percentage increase becomes your COLA.

Key Takeaways

  • The COLA is announced in October each year and takes effect with your January payment, with no action required on your part.
  • The raise amount is based on inflation measured by the Consumer Price Index, so it varies from year to year and can be zero.
  • Everyone receiving Social Security gets the same COLA percentage, whether you are retired, disabled, or a survivor beneficiary.
  • Your new benefit amount is shown on a notice mailed to you in December, and you can also check it on your my Social Security account online.

How the COLA percentage is calculated

The Social Security Administration uses a specific three-month window to measure inflation. They take the average Consumer Price Index for July, August, and September of the current year and compare it to the average for those same three months in the previous year. If the current year's average is higher, that percentage difference is your COLA.

For example, if the average CPI-W for July through September 2024 was 5 percent higher than the average for July through September 2023, the 2025 COLA would be 5 percent. Everyone receiving a Social Security benefit would see their monthly amount increase by 5 percent starting in January 2025.

The announcement happens on the second Tuesday in October. The Social Security Administration publishes the exact COLA percentage on their website and sends notices to all beneficiaries. You can also find the historical COLA amounts on the Social Security website if you want to see what past raises have been.

What counts as inflation for COLA purposes

The Consumer Price Index tracks the cost of a fixed basket of goods and services that a typical urban worker buys. This includes rent or mortgage payments, groceries, gasoline, electricity, prescription drugs, medical visits, clothing, and other everyday expenses. When these prices rise, the CPI rises, and that triggers a COLA.

The index does not include everything. It focuses on what wage earners and clerical workers spend money on, not what retirees spend money on. This means if your costs as a retiree are rising faster than the CPI-W is rising — for example, if your prescription drug costs or nursing home costs are climbing faster than average — the COLA may not fully cover your actual cost increases. Conversely, if prices for things you do not buy much of are rising, the COLA may be higher than your personal inflation.

The Social Security Administration has considered using a different inflation measure called the Chained CPI, which some argue better reflects how people actually adjust their spending when prices change. However, as of now, the CPI-W remains the official measure used for COLA calculations.

When you start receiving your raise

The COLA takes effect with your January payment. If you receive Social Security by direct deposit, the new amount appears in your bank account in early January. If you receive a check by mail, the check arrives later in January with the new amount.

The Social Security Administration mails a notice in December showing your new benefit amount, the COLA percentage, and the effective date. This notice is called the "Notice of Benefit Amount" or sometimes the "COLA notice." You should receive it by early December, though the exact timing can vary by a few days depending on your location.

If you do not receive a notice by mid-December, you can log into your my Social Security account online to see your new benefit amount. You can also call Social Security at 1-800-772-1213 to ask about your new amount, though wait times are often long.

COLA in years with low or no inflation

In years when inflation is very low or negative, the COLA can be zero or close to zero. This happened in 2010, 2011, and 2016, when there was no COLA announced. Your benefit amount stayed the same as the previous year.

Even when there is no COLA, your benefit amount does not decrease. Social Security has a "no-reduction rule" that prevents your monthly payment from going down from one year to the next. If inflation is negative, your benefit stays flat rather than declining.

Some people argue that the current COLA formula does not keep up with the actual costs retirees face, particularly for healthcare and housing. However, changing the formula would require an act of Congress, and no change has been made to the basic COLA calculation method in decades.

How the COLA affects your taxes and Medicare premiums

When your Social Security benefit increases, your Medicare Part B and Part D premiums may also change. The Social Security Administration uses a "hold harmless" rule that protects most beneficiaries: your Medicare premium cannot increase by more than the amount of your COLA increase. This means the net increase to your benefit is reduced by the premium increase, but your take-home payment does not go down.

However, if you are a higher-income beneficiary or if you recently enrolled in Medicare, you may not be protected by the hold harmless rule and could see a larger premium increase than your COLA increase.

Your Social Security benefit may also be subject to income tax if your total income exceeds certain thresholds. The COLA increase could push you over that threshold, making a portion of your benefit taxable. This depends on your other income sources, such as pensions, investment income, or wages from work.

Checking your benefit amount year to year

You can track your benefit amount and see the COLA history by creating or logging into your my Social Security account at ssa.gov. This account shows your current benefit amount, your payment history, and an estimate of what you will receive in the future.

The my Social Security website also displays your earnings record, which is the foundation for your benefit calculation. If you spot an error in your earnings record, you can report it through the website or by calling Social Security.

You can also request a benefit verification letter from Social Security, which shows your current monthly benefit amount and is often needed for other purposes, such as proving your income to a landlord or lender.

Frequently Asked Questions

Can I get a COLA raise if I have not started collecting Social Security yet?

No. The COLA only applies to people already receiving a Social Security payment. If you have not filed for benefits yet, your future benefit amount will be calculated based on your earnings record at the time you file. However, your benefit will then receive COLA increases each year after you start collecting.

Does the COLA raise explore to Supplemental Security Income (SSI)?

Yes. SSI recipients receive the same COLA percentage as Social Security beneficiaries, and it takes effect at the same time in January. However, SSI has income and resource limits, so a COLA increase could potentially affect your SSI amount if your total income crosses a threshold.

What if I think the COLA is too low to cover my actual costs?

You can contact your elected representatives in Congress to express your concerns about the COLA formula. Some advocacy groups argue for changes to the calculation method or for a different inflation measure. However, only Congress can change the COLA law, and no change has been made to the basic formula since it was created in 1975.

How far back does the COLA history go?

The COLA has been in place since 1975. Before that, Congress voted on benefit increases individually. You can find a complete list of COLA percentages by year on the Social Security Administration website, which shows what the raise was for each year going back to 1975.

If I am working and receiving Social Security, does the COLA still explore?

Yes. The COLA applies to all Social Security beneficiaries regardless of whether you are working. However, if you are under full retirement age and earning above a certain amount, Social Security will reduce your benefit payment. The COLA still increases your full benefit amount, but the reduction may offset some or all of the increase depending on your earnings.