Why Was the Social Security COLA Increase Only a Modest Amount This Year?

If you’re receiving Social Security benefits, you may have heard that the cost-of-living adjustment (COLA) increase for this year was only a modest amount, rather than the 8.7% that some people were expecting. This has left many beneficiaries wondering why this was allowed and what it means for their benefits.

The COLA increase is an annual adjustment that helps ensure that Social Security benefits keep pace with inflation. The exact amount of the COLA increase is determined by the Department of Labor’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If the CPI-W increases from one year to the next, the COLA increase is calculated based on the percentage of the increase.

So, why wasn’t the COLA increase 8.7% this year? The simple answer is that the CPI-W didn’t increase by that much. In fact, the COLA increase for this year was only a modest amount, and the exact amount is still to be determined. This means that Social Security beneficiaries will not see a significant increase in their benefits this year.

It’s important to note that the COLA increase only applies to retirement, survivor, and disability benefits, not to Supplemental Security Income (SSI) payments. SSI is a needs-based program that provides financial assistance to individuals with low income and few assets.

The Social Security Disability Insurance (SSDI) program is also not impacted by the COLA increase. SSDI is a program that provides benefits to individuals who are unable to work due to a disability.

Overall, while the COLA increase may not be as high as some people were hoping for, it’s still an important adjustment that helps ensure that Social Security benefits keep pace with inflation. If you receive Social Security benefits, it’s important to stay informed about these changes and how they’ll affect you. You can visit the Social Security Administration’s (SSA) website for updates and more information about the COLA increase and other changes to the program.