Cost-Of-Living Adjustment (COLA): Legal Definition

A cost-of-living adjustment (COLA) is the amount that Social Security retirement or disability benefits go up to keep up with inflation. The Social Security Administration must look at the cost of living each year and determine if a COLA is necessary. Without this, those who rely on these benefits might struggle to make ends meet as consumer prices continue to rise.

Calculating Cost-of-Living Adjustments

Before the mid-70s, those who received Social Security retirement or disability benefits only got increases when Congress passed legislation to give them one. This meant they often suffered because of inflation until lawmakers decided to take action. Regular COLAs came as a provision of the Social Security laws passed in 1972 and became automatic in 1975.

As of 1975, the Social Security Administration must re-evaluate benefits and the cost of living each year automatically. This is done using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). They look at the percentage increase from the third quarter of the previous year until the third quarter of the current year.

The percentage increase in the Consumer Price Index (CPI-W) during this period is the percentage increase used for the COLA. If there is no change or the CPI-W went down, there is no COLA.

The Amount of a COLA Varies from Year to Year

COLA can vary greatly from year to year. The increase for 2019 was one of the largest in the last few years at 2.8 percent. Sometimes, no adjustment is necessary. Recent COLA amounts include:

• January 2014 – 1.5 percent
• January 2015 – 1.7 percent
• January 2016 – 0.0 percent
• January 2017 – 0.3 percent
• January 2018 – 2.0 percent
• January 2019 – 2.8 percent

The Social Security Administration announces the COLA for the following year each October. For example, in October 2019, they will announce the adjustment that goes into effect beginning with payments in January 2020.

You Can Check Your COLA and New Payment Amount Each December

Through 2018, the Social Security Administration used online notices as well as mailed notices to let everyone know about their COLA. Beginning in 2019, you will have the option of getting only an online notice with the goal of reducing the number of paper notices sent in the future.

To check your COLA and new benefit amount online, you will log in on my Social Security and check the Message Center. From there, you can view, save, or print the message.

Talk to a Pittsburgh Social Security Disability Attorney About Your Case

At Berger and Green, our Social Security disability attorneys can help you understand how these benefits work, complete your application, file your claim, challenge a denial, and more. If you have questions about how a COLA affects your payments or are fighting to get the correct payments you deserve, reach out to us.

We serve clients in the greater Pittsburgh area, Allegheny County, and throughout western Pennsylvania and in Columbus, Ohio. Call us today at 412-661-1400 for your complimentary consultation.