Are Social Security Retirement Benefits Inflation, or Cost of Living (COLA), Adjusted?
By Christopher L. Hudson, CIMA
Beginning in 1975, The Social Security Administration started automatic annual cost-of-living allowances. The COLA adjustments are tied to the annual increase in the Consumer Price Index (CPI) from the third quarter two years prior – through the third quarter of the previous year. These inflation adjusted checks begin in January.
As a recent example: The Consumer Price Index (CPI) from the 3rd quarter of 2020 through the 3rd quarter of 2021 increased by 5.9%. Beginning in January of 2022, Social Security recipients saw a 5.9% increase in their Social Security retirement income benefit for calendar year 2022.
The FICA and retirement earnings limit are also adjusted for inflation.
