what is a cost of living adjustment cola 
a cost of living adjustment cola is an increase made to social security benefits and supplemental security income ssi to counteract the effects of inflation and rising prices in the economy colas are typically equal to the percentage increase in the consumer price index for urban wage earners and clerical workers cpi w for a specific period the consumer price index cpi represents the average prices of a basket of goods and is used to measure inflation 1the cola was 8 7 for 2023 so their annual benefit would increase to 10 870 if someone received 10 000 in social security benefits in 2022 the cola is just 3 2 for 2024 someone who received 10 000 in social security benefits in 2023 would see their 2024 annual benefit increase to 10 320 understanding the cost of living adjustment cola inflation was high during the 1970s so compensation related contracts real estate contracts and government benefits used colas to protect against inflation 2 the u s bureau of labor statistics bls determines the cpi w that the social security administration ssa uses to compute colas the formula applies the percentage increase in the cpi w from the third quarter of one year to the third quarter of the following year this information is updated regularly on the ssa website 34congress ratified a cola provision to offer automatic yearly colas based on the annual increase in the cpi w that went into effect in 1975 social security benefits were increased when congress approved special legislation before 1975 colas were based on the increase in the cpi w from the second quarter of 1974 to the first quarter of 1975 in that year they were based on the increases in the cpi w from the first quarter of the previous year to the first quarter of the current year from 1976 to 1983 colas have been dependent on the cpi w from the third quarter of the previous year to the third quarter of the current year since 1983 35inflation levels ranged from 3 3 to 11 3 in the 1970s the cola increase was 8 and the inflation rate was 9 1 in 1975 the cola reached the highest level in history at 14 3 in 1980 when the inflation rate was 13 5 drastically lower inflation rates prompted small cola increases averaging 2 to 3 per year during the 1990s that continued into the early 2000s when even lower inflation rates resulted in no cola increases at all in 2010 2011 and 2016 the cola for 2023 was 8 7 up from 5 9 in 2022 and 1 3 in 2021 due to the high inflation levels witnessed in 2022 inflation was 8 that year the cola is 3 2 for 2024 36