Frequently Asked Questions about Social Security’s COLA

In October 2016, Social Security’s annual cost-of-living adjustment (COLA) for 2017 will be calculated, and Social Security beneficiaries will learn by what percentage their monthly benefits will be adjusted in the coming year to offset the effects of inflation. Social Security beneficiaries are expected to receive only a small COLA, likely less than one percent, in 2017—after receiving no COLA whatsoever in 2016. It is important to note that the COLA is calculated automatically and prescribed by law. Neither the President nor Congress has any influence over this automatic adjustment. This means that improving the COLA requires legislative action.

Although the annual, automatic COLA provides valuable protections against inflation, the current COLA is inadequate and needs to be improved to reflect the high healthcare costs of Social Security’s beneficiaries. This FAQ provides an explanation of the COLA, its importance to Social Security beneficiaries, and recommended policy changes to ensure that the COLA can more accurately fulfill its intended purpose of ensuring that Social Security benefits maintain their purchasing power year after year.

Frequently Asked Questions about Social Security’s COLA