The cost of living adjustment (COLA) rises

The SSA recently announced that benefit checks will increase by 8.7 percent in the coming year, which is a substantial increase from the usual 5.9 percent adjustment in 2023, which was high anyway. As a matter of fact, the recent COLA was the biggest increase since 1981, when it was only 11.2 percent.

The 8.7 percent adjustment will add to a $146 increase in all monthly benefits for the regular retired worker on Social Security, starting with January. To be more precise, the average check for all retired workers will automatically increase from $1,681 to $1,827.

For a married couple where both partners receive the benefits, the estimated payment will automatically increase from $2,734 to $2,972, which is no less than $238 more.

Since 1975, the Social Security Administration managed to tie the cost of living adjustments to the Consumer Price Index for urban wage earners, but also for clerical workers. The SSA has a method: it compares the third-quarter CPI-W in the last year to the third-quarter CPI-W in the current one.

That’s how COLA is measured. Then, it adjusts the COLA depending on the difference in CPI-W from one year to the following one.