Cost-of-Living Adjustments

SSA Publication No. 05-10526, October, 2010 (View .pdf)

Social Security and Supplemental Security Income (SSI) benefits are adjusted to reflect the increase, if any, in the cost of living as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) prepared by the Bureau of Labor Statistics (BLS). The purpose of the cost-of-living adjustment (COLA) is to ensure that the purchasing power of Social Security and SSI benefits is not eroded by inflation.

For purposes of determining the COLA, the average CPI-W for the third calendar quarter of the last year a COLA was determined is compared to the average CPI-W for the third calendar quarter of the current year. The resulting percentage increase, if any, represents the percentage that will be used to increase Social Security benefits beginning for December of the current year. SSI benefits increase by the same percentage the following month (January). If the increase in the CPI-W is at least one-tenth of one percent (0.1 percent), there will be a COLA. However, if the CPI-W increases by less than 0.05 percent, or if the CPI-W decreases, there will not be a COLA.

BLS determined there was no increase in the CPI-W from the third quarter of 2008, the last year a COLA was determined, to the third quarter of 2010. Therefore, under existing law, there can be no COLA in 2011.