Why Social Security COLA Will Rise?


The Social Security Administration will release its greatest cost-of-living increase in 40 years on Thursday.

The expected 8.7% boost will help programme participants meet inflation-driven cost increases.

COLAs have only risen above 8.7 percent three times, from 1979 and 1981, at 9.9 percent, 14.3 percent, and 11.2 percent.

Inflation rates determine COLAs. In 1980, inflation was above 14% but fell to 3.5% by the end of the decade; the COLA followed, falling to 5.4% in 1990.

According to the bipartisan Senior Citizens League, the COLA raise will increase the average monthly retiree check by $144.

Since 1975, automatic annual changes have been based on the CPI-W. Congress approved previous changes.

The CPI-W tracks worker-purchased goods and services. 

Some experts suggest replacing CPI-W with CPI-Elderly. 

The CPI-E, which reflects senior spending, doesn't necessarily increase COLA.

The modifications are meant to help those on fixed incomes keep up with rising rents, mortgages, and grocery costs.