What is a COLA?
Legislation enacted in 1973 provides for cost-of-living adjustments, or COLAs. With
COLAs, Social Security and Supplemental Security Income (SSI) benefits keep pace with
There will be no increase in Social Security benefits payable in January 2016, nor will there be an increase in SSI payments.
How is a COLA calculated?
The Social Security
Act specifies a formula for determining each COLA. According to the formula, COLAs
are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical
Workers (CPI-W). CPI-Ws are calculated on a monthly basis by the Bureau of Labor
A COLA effective for December of the current year is equal to the percentage increase
(if any) in the average CPI-W for the third quarter of the current year over the average
for the third quarter of the last year in which a COLA became effective. If there is an
increase, it must be rounded to the nearest tenth of one percent. If there is no
increase, or if the rounded increase is zero, there is no COLA.
The last year in which a COLA became effective was 2014. Therefore the law requires
that we use the average CPI-W for the third quarter of 2014 as the base from which
we measure the increase (if any) in the average CPI-W. The base average is
234.242, as shown in the table below.
Also shown in the table below, the average CPI-W for the third quarter of 2015 is
233.278. Because there is no increase in the CPI-W from the third quarter of
2014 through the third quarter of 2015, there is no COLA for December 2015.
|Third quarter total
|Average (rounded to the nearest 0.001)