Millions of Americans look forward to a special day that comes around once each year. I'm not talking about Independence Day, Christmas, or any other holiday, though. Instead, I'm referring to the day Social Security beneficiaries find out what their annual cost-of-living adjustment (COLA) will be.
The annual COLA is intended to help Social Security benefits keep up with inflation. Sometimes the adjustment is high. Sometimes it's not. Here's the average Social Security COLA from 1975 to 2023.
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Why not start earlier than 1975?
You might wonder why 1975 is our starting point. The answer is that it's the year automatic Social Security benefit increases tied to the cost of living were introduced. Before then, Social Security increases required an act of Congress.
Social Security benefits were adjusted to reflect higher costs of living before 1975. In 1950, Congress approved a 77% benefit increase. While this adjustment might seem huge, Social Security beneficiaries had not received an increase since the first benefits were paid in 1940. The 77% adjustment matched the overall increase in prices of goods and services over the previous 10 years.
Congress authorized another Social Security benefits increase of 12.5% two years later. In 1954, it approved a benefits increase of 13%. Another 7% increase was given the green light in 1958, although it didn't take effect until January 1959.
In 1967, Congress approved a benefits increase of 13% to be effective in February 1968. A 15% increase was authorized in 1969 and became effective in January 1970. In 1972, Congress passed major Social Security changes, including a 20% benefits increase effective in September 1972 and an automatic COLA to begin in 1975.
49 years of automatic Social Security COLAs
Beginning in 1975, the Social Security Administration (SSA) calculated annual COLAs using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The table below shows the annual COLA by year. (Note: The year reflects when the COLA was announced; the adjustment went into effect in January of the following year.)
| Year | COLA | Year | COLA | Year | COLA |
|---|
| 1975 | 8% | 1992 | 3% | 2009 | 0% |
| 1976 | 6.4% | 1993 | 2.6% | 2010 | 0% |
| 1977 | 5.9% | 1994 | 2.8% | 2011 | 3.6% |
| 1978 | 6.5% | 1995 | 2.6% | 2012 | 1.7% |
| 1979 | 9.9% | 1996 | 2.9% | 2013 | 1.5% |
| 1980 | 14.3% | 1997 | 2.1% | 2014 | 1.7% |
| 1981 | 11.2% | 1998 | 1.3% | 2015 | 0% |
| 1982 | 7.4% | 1999 | 2.5% | 2016 | 0.3% |
| 1983 | 3.5% | 2000 | 3.5% | 2017 | 2% |
| 1984 | 3.5% | 2001 | 2.6% | 2018 | 2.8% |
| 1985 | 3.1% | 2002 | 1.4% | 2019 | 1.6% |
| 1986 | 1.3% | 2003 | 2.1% | 2020 | 1.3% |
| 1987 | 4.2% | 2004 | 2.7% | 2021 | 5.9% |
| 1988 | 4% | 2005 | 4.1% | 2022 | 8.7% |
| 1989 | 4.7% | 2006 | 3.3% | 2023 | 3.2% |
| 1990 | 5.4% | 2007 | 2.3% | | |
| 1991 | 3.7% | 2008 | 5.8% | | |
Data source: Social Security Administration. Table by author.
You might have noticed the amount of the COLA was 0% in three years: 2009, 2010, and 2015. That's because the CPI-W in the third quarter of each year didn't increase from the average level in the same quarter of the previous year. The highest annual COLA of 14.3% was announced in 1980, when inflation soared.
The average Social Security COLA from 1975 to 2023 was 3.8%. However, the sky-high inflation in the 1970s and early 1980s skews this average somewhat. The median Social Security COLA during the period was 3%.
What will the next COLA be?
We won't find out what the next Social Security COLA will be until October. The Bureau of Labor Statistics doesn't release the CPI-W for September until mid-October. The SSA needs the CPI-W numbers for all three months of the third quarter to calculate the COLA.
However, the inflation data in the months leading up to Q3 are watched closely to get a sense of what the COLA might be. Based on the latest data, The Senior Citizens League projects that the next COLA will be around 2.6%. Whatever the increase will be, it probably won't be enough to fully offset the rising costs for retirees.
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