COLA stands for Cost of Living Adjustment, which helps Social Security benefits keep pace with inflation.
COLA is usually adjusted yearly based on the Consumer Price Index (CPI), which tracks inflation.
The COLA increase is typically expressed as a percentage, reflecting how much more you’ll receive in benefits.
The COLA increase directly boosts monthly Social Security payments, providing more purchasing power.
For instance, a 5% COLA increase on a $1,500 monthly benefit would raise it to $1,575.
The purpose of the COLA is to help Social Security recipients keep up with rising living costs.
A COLA increase may be offset by rising Medicare premiums, so the net gain might be smaller.
Stay informed on annual announcements to understand how each year's COLA will impact your Social Security payments.