After Americans retire, Social Security benefits help boost their earnings. The government offers the 70 million people who receive these benefits an increase each year to keep their benefits in line with inflation.
Each fall, the Social Security Administration determines this cost-of-living adjustment, or COLA, depending on the yearly average inflation rate for the 3rd quarter of the year, which runs from July through September. The COLA will increase in proportion to how much more this inflation rate differs from the prior year’s inflation rate.
As an illustration, historic inflation from 2021 to 2022 resulted in a 2023 increase of 8.7%.
Based on the most current projection, beneficiaries won’t experience a COLA so high soon since inflation has largely dropped. However, retirees must still be aware of and keep up with adjustments to their Social Security benefits.
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