How Social Security COLA Is Calculated
The six CPI-W numbers behind every COLA, explained in plain English.
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The short answer
Social Security's COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. SSA compares the average index for July, August, and September with the corresponding third-quarter average from the last year a COLA became effective.
Six numbers drive the result
Three monthly CPI-W readings form the current-year Q3 average. Three readings form the comparison average. The percentage increase between those averages is rounded to the nearest tenth of one percent. When there is no increase, there is no COLA.
Why July alone is not enough
July is one-third of the official quarter. August and September can move the average, so any value published before the September CPI-W release needs an estimate or scenario label.
What happens to your benefit
The COLA raises the underlying Social Security benefit, but the amount reaching the bank can also reflect claiming adjustments, statutory rounding, Medicare premiums, taxes, and withholding. Use the COLA calculator for a gross estimate and the COLA + Medicare calculator for a net-deposit estimate.
General information only. Confirm personal benefit details with SSA or your my Social Security account.