What is the Cost-of-Living Adjustment or COLA?
Cost-of-Living Adjustments, or COLAs, are an annual increase for recipients of Social Security, military, and other government benefits. An estimated 80 million people receive benefits that are affected by COLAs. COLAs are supposed to help maintain the purchasing power of benefits as consumer prices increase. COLAs have been automatically determined by increases in the Consumer Price Index (CPI) since 1972. Prior to that it took special legislation from Congress to increase Social Security benefits.
