Automatic Determinations

COLA history

How COLA is used

Federal SSI benefit rate

Wage-indexed amounts

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 inflation.

Latest COLA
The latest COLA is 1.5 percent for Social Security benefits and SSI payments. Social Security benefits will increase by 1.5 percent beginning with the December 2013 benefits, which are payable in January 2014. Federal SSI payment levels will also increase by 1.5 percent effective for payments made for January 2014. Because the normal SSI payment date is the first of the month and January 1 is a holiday, the SSI payments for January are always made at the end of the previous December.

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 Statistics.

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.

COLA Computation
The last year in which a COLA became effective was 2012. Therefore the law requires that we use the average CPI-W for the third quarter of 2012 as the base from which we measure the increase (if any) in the average CPI-W. The base average is 226.936, as shown in the table below.

Also shown in the table below, the average CPI-W for the third quarter of 2013 is 230.327. Because this average exceeds 226.936 by 1.5 percent, the COLA effective for December 2013 is 1.5 percent. The COLA calculation, with the result rounded to the nearest one-tenth of one percent, is:

(230.327 - 226.936) / 226.936 x 100 = 1.5 percent.

  CPI-W for—
2012 2013
July 225.568 230.084
August 227.056 230.359
September 228.184 230.537
Third quarter total 680.808 690.980
Average (rounded to the nearest 0.001) 226.936 230.327