COLA
An annual percentage increase applied to Social Security, SSI, VA disability, and other federal benefit payments to help keep pace with inflation, as measured by the Consumer Price Index (CPI-W).
COLA is announced each October by the SSA and takes effect January 1 of the following year.
The 2025 COLA was 2.5%. Projections for 2027 suggest a smaller increase (~1.2%-3.1%).
VA disability compensation also receives an annual COLA adjustment tied to the same index.
→ IRMAA (Medicare premium adjustments) can offset Social Security COLA increases for higher-income beneficiaries.
Also known as
Related terms
- IRMAA
An additional premium surcharge added to Medicare Part B and Part D premiums for beneficiaries whose income exceeds certain thresholds, based on modified adjusted gross income (MAGI) from two years prior.
- SSI
A federal needs-based program administered by the SSA that provides monthly cash payments to adults and children with disabilities or blindness, and to adults 65+, who have limited income and resources.
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Frequently asked questions about COLA
What is COLA?+
COLA stands for Cost-of-Living Adjustment. It is a yearly increase in payments for Social Security, SSI, and VA disability benefits. This helps your benefits keep up with the cost of everyday things. The government looks at how prices change to decide the COLA amount each year.
Who gets COLA?+
If you receive Social Security, Supplemental Security Income (SSI), or VA disability compensation, you will get COLA. This yearly boost helps your benefit payments keep their buying power. It makes sure your money goes as far as it did the year before when prices increase.
When does COLA take effect?+
The new COLA amount usually starts in December for some benefit recipients, with payments arriving in January of the next year. You don't need to do anything to get it. The Social Security Administration and Department of Veterans Affairs automatically apply the new COLA to qualifying benefits.
How is COLA calculated?+
COLA is figured out by looking at how much prices have changed. The government uses something called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If prices go up, your benefits get a COLA to match. This helps your money keep its value.