For instance, let's hypothetically say the collective price for a large basket of goods and services regularly purchased by retirees increases in price by 3% from one year to the

When you are on  Social Security, you can expect your retirement benefits to increase during most years. That’s because Cost of Living Adjustments (COLAs) typically happen automatically from year to year.

The cost-of-living adjustment (COLA) applied to Social Security payments in any given year is based on CPI-W inflation from the third quarter of the previous year. In that sense, COLAs are a reimbursement mechanism to compensate retirees for the buying power benefits lost in the previous year.

Social Security’s cost-of-living adjustment (COLA) mechanism, designed to safeguard the buying power of benefits against inflation, faces challenges as inflation trends upward. The COLA for 2025, based on inflation data from the third quarter of 2024,