What the Annual Cost-of-Living Adjustment Does, and Doesn’t, Cover
The yearly increase is tied to an inflation index built around workers’ spending. Retirees’ costs don’t always move the same way.
By Margaret Ellison, Senior Editor, Social Security
Published 5 min read
Social Security’s cost-of-living adjustment is calculated from the Consumer Price Index for Urban Wage Earners and Clerical Workers, measured over the third quarter of the year. The adjustment applies to benefits beginning in January.
Because the index reflects the spending of working households, it may not track the costs that weigh most heavily on retirees, such as health care and housing. Medicare Part B premiums, which are often deducted directly from benefits, can also absorb part of an increase.
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Senior Editor, Social Security
Margaret Ellison edits coverage of Social Security claiming, spousal and survivor benefits, and the annual cost-of-living adjustment.
