How does Social Security calculate the COLA?

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Your Social Security payment typically is adjusted annually for inflation to ensure that the purchasing power of benefits is not eroded by rising prices. This cost-of-living adjustment, or COLA, tracks inflation using a government measure of consumer prices for a variety of household goods and services.

Benefits go up if there is a measurable increase (at least 0.1 percent) in this price index from year to year. For 2022, the cost-of-living increase will be 5.9 percent, boosting benefits by an average of $92 a month starting in January.

That rise, fueled by a spike in prices for many goods during the COVID-19 pandemic, is the largest since 1982. The COLA was 1.3 percent in 2021, 1.6 percent in 2020 and 2.8 percent in 2019.

Keep in mind

• A COLA increase is not guaranteed. If there is no inflation in a given year, there will be no cost-of-living adjustment to benefits the following year. This has happened a handful of times, most recently in 2015.
  
• When there is a cost-of-living increase, you might not see all of it in your benefit payment. If your Medicare Part B premiums are deducted from your Social Security, as is the case with 70 percent of Part B enrollees, a Medicare rate increase could offset the COLA.

Updated October 13, 2021

More on Social Security Benefits

• How are Social Security benefits calculated?
• When should I start collecting my Social Security retirement benefit?
• How much longer will Social Security be around?