What Is a Cost-of-Living Adjustment, and How Does It Work? What will be the cost-of-living adjustment for Social Security in 2022? According to the Social Security Administration, the cost-of-living adjustment (COLA) for Social Security in 2022 will be 1.3%. Does everyone on Social Security get the COLA increase? The answer is no, not everyone on Social Security gets theCOLA increase. Only those people who are receiving Social Security benefits as of December 31 of the year prior to the COLA increase are eligible to receive the COLA. What will the COLA be for 2023 for Social Security? The COLA (cost-of-living adjustment) for 2023 for Social Security has not yet been announced. The COLA is based on the Consumer Price Index (CPI-W) from the third quarter of the previous year (2020). How much will Social Security checks go up in 2023? According to the Social Security Administration, benefits will increase by 1.3 percent in 2023. This is the largest cost-of-living adjustment (COLA) since 2019, when benefits increased by 2.8 percent. The average monthly Social Security check will go up by about $20 in 2023. How is COLA pay calculated? There is no set formula for calculating COLA pay. However, COLA pay is typically based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), with adjustments made for inflation. The CPI-W is a measure of the average change in prices paid by urban consumers for a market basket of goods and services.
COLA pay is typically calculated using the CPI-W for the third quarter of the previous year (July, August, and September). For example, the COLA pay for January 2021 would be based on the CPI-W for the third quarter of 2020. The CPI-W is then compared to the CPI-W for the third quarter of the previous year. If the CPI-W for the current year is higher than the CPI-W for the previous year, then a COLA pay increase is typically given. The amount of the COLA pay increase is usually based on the percentage difference between the two CPI-W values.