For millions of Americans, Social Security isn't just a benefit: it's the foundation for keeping the house in order, paying the bills, and filling the refrigerator. Every October is a key month because the Social Security Administration (SSA) announces the cost-of-living adjustment (COLA). This increase can directly affect how much money you'll receive next year.
What is COLA and how does it work?
COLA stands for cost-of-living adjustment, and its goal is to help beneficiaries keep their purchasing power in the face of inflation. Every year, COLA is calculated using data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index measures how prices for goods and services that impact daily life change.
In other words, if prices go up, your COLA will also rise. This ensures that your money keeps the same value over time, even as the costs of daily living increase.
Why October is the decisive month
Although people talk about Social Security all year long, October is when COLA is officially announced. It's the moment when beneficiaries find out how much their monthly check will increase.
This announcement not only tells you the exact amount you'll receive, but it also lets you plan your budget for the coming year. For many retirees and people with disabilities, this increase can make the difference between just getting by each month or having a bit more comfort.
What to expect in your check
The impact of COLA depends on inflation. For example, if your current benefit is $1,700 per month:
- A 2% COLA would mean about $34 more per month.
- A 3% COLA could add around $51 per month.
Even though the difference may seem small, by the end of the year it adds up and can be a significant relief for expenses like medicine, utilities, or food. That's why it's important to stay informed and adjust your budget according to what's announced.
How to prepare for the announcement
Follow the news: SSA will publish the official figure in October. Stay alert so you don't miss the information.
Review your budget: Know your expenses and assess where you might need adjustments. This helps you avoid spending more than you'll receive.
Consider other sources of income: If possible, explore additional options to supplement your Social Security, such as part-time jobs or small businesses.
Use your online account: The My Social Security platform lets you see your updated benefit as soon as COLA is applied.