Social Security: Cost-of-Living Adjustments
Social Security: Cost-of-Living Adjustments
Updated January 15, 2025
Congressional Research Service
https://crsreports.congress.gov
94-803
Social Security: Cost-of-Living Adjustments
Congressional Research Service
Summary
To compensate for the effects of inflation, Social Security recipients usually receive an annual cost-of-living adjustment (COLA). According to parameters outlined in the Social Security Act (42 U.S.C. §415(i)), a 2.5% COLA is payable starting in January 2025. For a retired worker, the 2024 COLA will raise the estimated average monthly benefit amount received in January 2025 by $49 from $1,927 to $1,976 (after final rounding down to the nearest dollar).
Social Security COLAs are based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), updated monthly by the Department of Labor’s Bureau of Labor Statistics (BLS). The COLA equals the growth, if any, in the index from the highest third calendar quarter average CPI-W recorded (typically, from the previous year) to the average CPI- W for the third calendar quarter of the current year. The COLA becomes effective in December of the current year and is payable in January of the following year. (Social Security payments always reflect the benefits due for the preceding month.)
If there is no percentage increase in the CPI-W between the measuring periods, no COLA is payable. In other words, the Social Security COLA can never be negative, and benefit levels are not reduced, even during times of a decreasing price index. No COLA was payable in January 2010, January 2011, or in January 2016.
The January 2025 COLA will also be applied to Supplemental Security Income (SSI) and railroad retirement “tier 1” benefits, among other changes in the Social Security program. Although COLAs under the federal Civil Service Retirement System (CSRS) and the federal military retirement program are not triggered directly by the Social Security COLA, these programs use the same measuring period and formula for computing their COLAs.
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Contents
How Is the Social Security Cost-of-Living Adjustment Calculated? .............................................. 1 What Is the COLA to Be Paid in January 2025? ............................................................................. 2 What Happens When No COLA Is Payable? .................................................................................. 3
Medicare Premiums and a Very Small or No COLA ................................................................ 4
What Is Affected Besides Social Security Benefits? ....................................................................... 5
Other Programs ......................................................................................................................... 5 Social Security Program Elements ............................................................................................ 6
Historical COLA Values .................................................................................................................. 7
Tables
Table 1. Determination of the Social Security Cost-of-Living Adjustment (COLA)
Payable January 2025 ................................................................................................................... 2
Table 2. Average CPI for Urban Wage Earners and Clerical Workers (CPI-W) for the
Third Quarter, 2007-2024 ............................................................................................................. 4
Table 3. History of Social Security Cost-of-Living Adjustments Since Automatic
Adjustments Began in July 1975 .................................................................................................. 7
Table 4. Social Security Cost-of-Living Adjustments Prior to Automatic Adjustments
(Pre-1975)..................................................................................................................................... 9
Contacts
Author Information .......................................................................................................................... 9
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How Is the Social Security Cost-of-Living Adjustment Calculated?
A cost-of-living adjustment (COLA) is calculated automatically each year and is intended to reflect the change in the cost of living over a one-year period. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), updated monthly by the Bureau of Labor Statistics (BLS), is the measure used to calculate whether a COLA will be triggered. The CPI-W is an estimate of the average change in prices of the goods and services purchased by households whose incomes come primarily from clerical or wage occupations.1 This population is composed of urban households receiving more than one-half of their incomes from clerical occupations or hourly wages and with at least one member having worked 37 weeks in the previous 12 months (about 30% of the total U.S. population).2 The BLS measures the price change of each item in a “basket” of goods that the average person purchases, and then it computes overall inflation. It weights each of those price changes by the item’s share of spending.
The Social Security COLA is based on the percentage increase in the index from the highest third calendar quarter average CPI-W recorded (typically, from the previous year) to the average CPI- W for the third calendar quarter of the current year. The percentage increase is rounded to the nearest one-tenth of 1% (0.1%).3 The Social Security benefit amount, after applying the COLA, is rounded down to the next lowest dime.4 If the CPI-W triggers a COLA, the COLA becomes effective in December of the current year and is payable in January of the following year. (Social Security payments always reflect the benefits due for the preceding month.)
In some years, the CPI-W does not increase. Sometimes a decrease has been recorded. In those years, no COLA was payable as required by law.5 Benefits were not reduced to mirror the reduced cost of living but were held to the previous period’s levels. The Social Security COLA can never be negative, even during times of a decreasing price index.6 See “What Happens When No COLA Is Payable?” for more explanation.
Prior to 1975, Congress sporadically approved COLAs through the adoption of legislation. Automatic Social Security COLAs became effective in 1975 after being established in 1972 as part of P.L. 92-336, which included a number of amendments to the Social Security program.7 The legislation created Section 215(i) of the Social Security Act and required inflation to be at least 3% during the specified base period before a COLA could be triggered.8 As part of the
1 For an overview of the Consumer Price Index (CPI), see Department of Labor (DOL), Bureau of Labor Statistics (BLS), “Consumer Price Index Frequently Asked Questions,” https://www.bls.gov/cpi/questions-and-answers.htm; and Clark Burdick and Lynn Fisher, “Social Security Cost-of-Living Adjustments and the Consumer Price Index,” Social Security Bulletin, vol. 67, no. 3 (2007), http://www.ssa.gov/policy/docs/ssb/v67n3/v67n3p73.html. For more information on using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) and considering an alternate inflation index, see CRS Report R43363, Alternative Inflation Measures for the Social Security Cost-of-Living Adjustment (COLA).
2 DOL, BLS, “Consumer Price Index Frequently Asked Questions: Whose Buying Habits Does the CPI Reflect?,” https://www.bls.gov/cpi/questions-and-answers.htm.
3 42 U.S.C. §415(i)(1)(D) and 20 C.F.R. §404.275.
4 20 C.F.R. §404.275.
5 Section 215(i) of the Social Security Act (42 U.S.C. §415(i)).
6 See Social Security Administration (SSA), “Cost-of-Living Adjustment Must Be Greater Than Zero,” https://www.ssa.gov/OACT/COLA/positivecola.html.
7 See CRS Report RL30920, Social Security: Major Decisions in the House and Senate Since 1935.
8 42 U.S.C. §415(i).
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Omnibus Budget Reconciliation Act of 1986 (OBRA 86; P.L. 99-509), lawmakers eliminated the 3% trigger, requiring instead that, for a COLA to be payable, inflation (or wage growth in certain cases) be greater than 0% during the specified base period.
The legislation referred only to the Consumer Price Index (CPI), which at the time was the only index BLS produced and pertained to urban wage earners and clerical workers. In 1978, BLS made revisions to the CPI for Urban Wage Earners and Clerical Workers, which was renamed as the CPI-W, and introduced the CPI for All Urban Consumers (CPI-U).9 The Social Security Administration opted to use the revised CPI-W for calculating the Social Security COLA, as had been promulgated in regulations.10
What Is the COLA to Be Paid in January 2025?
On October 10, 2024, the Social Security Administration (SSA) announced that a 2.5% Social Security COLA would be paid starting in January 2025.11 The BLS release of the September 2024 CPI-W on that day made possible the comparison of the two July-September sets of CPI-W data (one for 2023 and another for 2024) needed to compute the COLA. Table 1 shows how the determination for the 2024 COLA, payable starting in January 2025, is computed under procedures set forth in Section 215(i) of the Social Security Act.
Table 1. Determination of the Social Security Cost-of-Living Adjustment (COLA)
Payable January 2025
CPI-W Index Points
July 2023 299.899
August 2023 301.551
September 2023 302.257
Average for Third Quarter of 2023 (rounded to the nearest one-thousandth of a point): 301.236
July 2024 308.501
August 2024 308.640
September 2024 309.046
Average for Third Quarter of 2024 (rounded to the nearest one-thousandth of a point): 308.729
Percentage increase or decrease from the third quarter average for 2023 to the third quarter average for 2024 and multiplied by 100% (rounded to the nearest one-tenth of 1% for the final application, when positive, as required by law):
((308.729-301.236)/301.236) * 100% =
2.5%
Social Security cost-of-living adjustment (zero if the percentage change is negative): 2.5%
Source: Department of Labor (DOL), Bureau of Labor Statistics (BLS) data series for the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for 2023 and 2024, https://www.bls.gov/cpi/data.htm. (Also Social Security Administration, “CPI for Urban Wage Earners and Clerical Workers,” https://www.ssa.gov/ oact/STATS/cpiw.html.) Note: The reference base period for the CPI-W is 1982-1984 (i.e., the period when the index equaled 100).
9 Stephen B. Reed and Kenneth J. Stewart, “Why Does BLS Provide Both the CPI-W and CPI-U?,” BLS Beyond the Numbers, vol. 3, no. 5 (2014), https://www.bls.gov/opub/btn/volume-3/why-does-bls-provide-both-the-cpi-w-and-cpi- u.htm.
10 20 C.F.R. §404.272.
11 SSA, “Social Security Announces 2.5 Percent Benefit Increase for 2024,” press release, October 10, 2024, https://www.ssa.gov/news/press/releases/2024/#2024-10-10.
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What Happens When No COLA Is Payable?
Since automatic Social Security benefit COLAs began in 1975, there have been three years in which no COLA was payable: 2010, 2011, and 2016. The Social Security Act specifies that a COLA is payable automatically if the average CPI-W for the third quarter of the current year is higher than the highest average CPI-W for the third quarter of past years, which is called the “cost-of-living computation quarter.” From 1975, when this provision became effective, to 2008, a new cost-of-living computation quarter was established in each subsequent year, which triggered the payment of a COLA each year.
If the average CPI-W for the third quarter of the current year is equal to or less than the average CPI-W for the cost-of-living computation quarter, no COLA is payable. For example, the average CPI-W for the third quarter of 2009 was less than the average CPI-W for the third quarter of 2008 (211.001 and 215.495, respectively). As a result, an automatic COLA in January 2010 was not triggered and the third quarter of 2008 remained the cost-of-living computation quarter (i.e., the benchmark) used to determine if a COLA would be payable in January 2011.12 Though the average CPI-W for the third quarter of 2010 (214.136) was greater than the average CPI-W for the third quarter of 2009, it did not exceed the average CPI-W for the third quarter of 2008. The third quarter of 2008 remained the cost-of-living computation quarter for at least one more year and a COLA was not payable in January 2011.
When the average CPI-W for the third quarter of 2011 (223.233) exceeded that for 2008, a 2012 COLA was triggered and the third quarter of 2011 became the cost-of-living computation quarter. New cost-of-living computation quarters were subsequently established in each year from 2012 to 2014, when the average CPI-W for the third quarter of 2012, 2013, and 2014 exceeded that for the third quarter of each preceding year.
Similarly, since the average CPI-W for the third quarter of 2015 (233.278) did not exceed that of 2014 (234.242), no COLA was paid in January 2016. Thus, for the COLA payable beginning in January 2017, the cost-of-living computation benchmark quarter remained the third quarter of 2014 where it was compared with the average CPI-W for the third quarter of 2016.13
See Table 2 for a recent history of average CPI-W performance for the third calendar quarter, and how that has affected changes to the cost-of-living computation quarter and the triggering of COLAs in some years.
12 Section 215(i) of the Social Security Act (42 U.S.C. §415(i)) specifies that no COLA is payable in subsequent years until the average CPI-W for the third quarter of the current year is greater than that for the last cost-of-living computation quarter.
13 The Congressional Budget Office (CBO) and the Social Security Trustees have both projected continued annual COLAs beyond 2020. For more information, see CBO, “Social Security Old-Age and Survivors Insurance—CBO’s Baseline as of June 2024,” June 2024, p. 3, https://www.cbo.gov/system/files/2024-06/51308-2024-06- socialsecurity.pdf; and SSA, The 2024 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and the Disability Insurance Trust Funds, May 2024, Table V.C1, https://www.ssa.gov/OACT/TR/2024/ tr2024.pdf.
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Table 2. Average CPI for Urban Wage Earners and Clerical Workers (CPI-W) for the
Third Quarter, 2007-2024
(cost-of-living computation quarters and COLAs)
Year
Average CPI-W for the
Third Quarter
New Cost-of-Living
Computation Quarter
Established Resulting COLAa
2007 203.596 yes 2.3%
2008 215.495 yes 5.8%
2009 211.001 no (215.495 of 2008 retained) no COLA
2010 214.136 no (215.495 of 2008 retained) no COLA
2011 223.233 yes 3.6%
2012 226.936 yes 1.7%
2013 230.327 yes 1.5%
2014 234.242 yes 1.7%
2015 233.278 no (234.242 of 2014 retained) no COLA
2016 235.057 yes 0.3%
2017 239.668 yes 2.0%
2018 246.352 yes 2.8%
2019 250.200 yes 1.6%
2020 253.412 yes 1.3%
2021 268.421 yes 5.9%
2022 291.901 yes 8.7%
2023 301.236 yes 3.2%
2024 308.729 yes 2.5%
Source: Created by CRS using data from DOL, BLS. a. Payable in January of the following year (when applicable).
Social Security benefit amounts cannot be reduced if the CPI-W decreases between the measuring periods. If the performance of the CPI-W does not trigger a COLA, benefits remain the same (prior to deductions for Medicare Part B and Part D premiums).
Medicare Premiums and a Very Small or No COLA14
The absence of a COLA increase (or a very small increase) may impact certain Medicare Part B enrollees.15 For Medicare Part B enrollees who have their Part B premiums withheld from their monthly Social Security benefits, a hold-harmless provision in the Social Security Act (§1839[f]) ensures that their net benefits will not decrease as a result of an increase in the Part B premium.16
14 This section was written by Paulette Morgan, Specialist in Health Care Financing.
15 For a full discussion of this relationship, see archived CRS Report R45324, The Interaction Between Medicare Premiums and Social Security COLAs (available to congressional clients upon request), and CRS Report R40082, Medicare Part B: Enrollment and Premiums.
16 42 U.S.C. §1395r(f).
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In most years, the hold-harmless provision has little impact; however, in a year in which there is a small or no increase in the Social Security COLA and a Part B premium increase, the hold- harmless provision may apply to a much larger number of people. For example, as a result of a 0% Social Security COLA in 2016 and a 0.3% COLA in 2017, an estimated 70% of Medicare beneficiaries were protected by this provision in those years and their Medicare Part B premiums were reduced so that their Social Security benefits, net of the Medicare Part B premium, would not decline.17 As a result of the relatively higher 2.0% Social Security COLA in 2018, the hold- harmless provision was not as broadly applicable in that year, and the percentage of Medicare Part B enrollees held harmless in 2018 declined to 28%. In 2019, 2020, 2021, 2022, 2023, and 2024, the Social Security COLAs of 2.8%, 1.6%, 1.3%, 5.9%, 8.7%, and 3.2%, respectively, were large enough that small shares of Medicare Part B enrollees (about 3.5%, 3%, 2%, 1.5%, 0.3%, and 0.5%, respectively) were held harmless and paid lower premiums.18
In 2025, it is expected, again, that the hold-harmless provision will not be broadly applicable. The standard Part B monthly premium for 2025 will be $185.00, an increase of $10.30 from the 2024 amount of $174.70.19 The increase in the standard Part B premium is mainly due to price changes and assumed utilization increases.20 For a retired worker, the 2024 COLA will raise the estimated average monthly benefit amount received in January 2025 by $49 from $1,927 to $1,976 (after final rounding down to the nearest dollar).This increase in the average monthly Social Security benefit amount would be sufficient to cover the increase in the standard Part B monthly premium, meaning it may be expected that a small share of Medicare Part B enrollees will be subject to the hold-harmless provision for 2025.
Regardless of the size (or absence) of a COLA, beneficiaries may see a net reduction in Social Security benefits as a result of increases in their Medicare Part D premiums or changes in their Medicare Part D plan selections.21
What Is Affected Besides Social Security Benefits?
Other Programs
Social Security COLAs trigger increases in other programs. Supplemental Security Income (SSI) benefits22 and railroad retirement “tier 1” benefits23 (the portion of the railroad retirement benefit equivalent to a Social Security benefit) are increased by the same percentage as the Social
17 The Bipartisan Budget Act of 2015 (BBA 2015; P.L. 114-74) provided some relief to the remaining 30% of beneficiaries not covered by the hold-harmless provision in 2016. This relief was not applicable in 2017, although the Secretary of the Department of Health and Human Services (HHS) “exercised her statutory authority to mitigate projected premium increases for these beneficiaries” to some extent. For more information on the impact of Medicare premiums on Social Security benefits, see CRS Report R40082, Medicare Part B: Enrollment and Premiums.
18 Ibid. In 2021, the growth in Medicare premiums was limited by the Continuing Appropriations Act, 2021, and Other Extensions Act (P.L. 116-159); therefore, the 1.3% Social Security COLA for 2021 was large enough to cover the full $3.90 increase in Part B premiums (from $144.60 to $148.50 per month) for most beneficiaries. For 2023, the calculation of 0.3% of Medicare Part B enrollees held harmless was derived from Centers for Medicare and Medicaid Services (CMS) Medicare enrollment data and hold-harmless data provided to the authors by SSA.
19 CMS, “2025 Medicare Parts A and B Premiums and Deductibles,” November 8, 2024, https://www.cms.gov/ newsroom/fact-sheets/2025-medicare-parts-b-premiums-and-deductibles.
20 CMS, “2025 Medicare Parts A and B Premiums and Deductibles.”
21 See CRS Report R40611, Medicare Part D Prescription Drug Benefit, for details.
22 The automatic COLA was authorized to apply to Supplemental Security Income in 1974 by P.L. 93-368.
23 The Railroad Retirement Act of 1974, P.L. 93-445, applied the Social Security COLA to Railroad Retirement, tier 1 benefits.
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Security COLA or are held constant when a COLA is not paid to Social Security beneficiaries. Railroad retirement “tier 2” benefits (equivalent to a private pension) are increased by an amount equivalent to 32.5% of the Social Security COLA.24 (If no COLA is paid to Social Security beneficiaries, then the railroad retirement tier 2 benefits are not increased.) Veterans’ pension benefits, survivors pension benefits, Medal of Honor pension benefits, and Dependency and Indemnity Compensation (DIC) for parents are adjusted automatically by law each year by the same percentage as the Social Security COLA.25 Veterans’ disability compensation and DIC for spouses and children are often increased by the same percentage as the Social Security COLA, but legislation must be passed annually for this purpose.26
Although COLAs under the Civil Service Retirement System (CSRS) and the federal military retirement system are not triggered by the Social Security COLA, these programs use the same measuring period and formula for determining their COLAs. The COLA for recipients of Federal Employees’ Retirement System (FERS) benefits equals the Social Security COLA if inflation is 2% or less, but is lower than the Social Security COLA otherwise.27
Social Security Program Elements
Some Social Security program elements, such as the contribution and benefits base (or the maximum level of Social Security covered earnings subject to Social Security payroll taxes), the retirement earnings test (RET) exempt amounts, and the substantial gainful activity (SGA) amount for the blind (which applies to Social Security disability beneficiaries), are indexed to wages, as opposed to prices.28 Although changes to those three elements are based on growth in national average wages (rather than changes in prices), these elements can be increased only when a COLA is payable.29 If a COLA is payable, then these amounts increase by the percentage that the national average wage index has increased.30 The contribution and benefits base, the RET exempt
24 The Railroad Retirement Act of 1974, P.L. 93-445, authorized this formula to be applied to Railroad Retirement, tier 2 benefits.
25 38 U.S.C. §5312. See also CRS Report R46511, Veterans Benefits Administration (VBA): Pension Programs.
26 Congress did not adopt COLAs for veterans’ pensions in 2010, 2011, and 2016 when no Social Security COLA was paid. P.L. 118-130, the Veterans’ Compensation Cost-of-Living Adjustment Act of 2024—which provides for increases to the amounts payable for disability compensation, additional compensation for dependents, the clothing allowance for certain disabled veterans, and DIC for surviving spouses and children by the same percentage as the cost- of-living increase in benefits for Social Security recipients—became effective December 1, 2024.
27 For more information on the adjustment of federal benefits for inflation, see CRS Report 94-834, Cost-of-Living Adjustments for Federal Civil Service Annuities and CRS Report RL34751, Military Retirement: Background and Recent Developments.
28 Changes in other Social Security elements are tied to the increase in national average wages, yet may be altered even if a COLA is not payable. These elements include the amount of earnings needed for a Social Security “quarter-of- coverage,” the monthly substantial gainful activity amounts for non-blind Social Security disability beneficiaries, and the annual coverage thresholds for domestic workers and election workers. For additional information, see SSA, “Quarter of Coverage,” https://www.ssa.gov/OACT/COLA/QC.html; SSA, “Determinations of Substantial Gainful Activity (SGA),” https://www.ssa.gov/oact/cola/sgadet.html; and SSA, “Employment Coverage Thresholds,” https://www.ssa.gov/OACT/COLA/CovThresh.html.
29 See CRS Report R46819, Social Security: The Effects of Wage and Price Indexing on Benefits.
30 Sections 230(a), 203(f)(8), and 223(d)(4)(A), respectively, of the Social Security Act (42 U.S.C. §§430(b), 403(f)(8), and 423(d)(4)(A), respectively). For additional information about these program elements, see CRS Report RL32896, Social Security: Raising or Eliminating the Taxable Earnings Base; CRS Report R44670, The Social Security Retirement Age; CRS Report R41242, Social Security Retirement Earnings Test: How Earnings Affect Benefits; and SSA, “Determinations of Substantial Gainful Activity (SGA),” https://www.ssa.gov/oact/cola/sgadet.html.
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amounts, and the SGA amount for the blind were unchanged in 2010, 2011, and 2016 when no COLA was payable.31
For example, had there been a COLA trigger in 2015, the contribution and benefits base would have increased from $118,500 in 2015 to $122,700 in 2016.32 Because there was no COLA trigger in 2015 applicable to Social Security benefits payable in 2016, the base instead remained unchanged. With the 0.3% COLA announced in 2016 for benefits payable in 2017, the contribution and benefits base increased in 2017 as well. Similar to how the COLA’s reference period is calculated, the increase in the contribution and benefits base was calculated on the increase in the average wage index from 2013 to 2015 (about 7.2%).33
Historical COLA Values
Table 3 shows the history of Social Security COLAs since the automatic COLAs began in 1975.
Table 3. History of Social Security Cost-of-Living Adjustments Since Automatic
Adjustments Began in July 1975
Date Increase Was Paid
Amount of Increase
(percentage)
January 2025 2.5%
January 2024 3.2%
January 2023 8.7
January 2022 5.9
January 2021 1.3
January 2020 1.6
January 2019 2.8
January 2018 2.0
January 2017 0.3
January 2016 0.0
January 2015 1.7
January 2014 1.5
January 2013 1.7
January 2012 3.6
January 2011 0.0
January 2010 0.0
January 2009 5.8
31 For more information on the interactions between the contribution and benefits base, the retirement earnings test (RET) exempt amounts, the substantial gainful activity (SGA) amounts, and other program elements with the COLA, see SSA, “Fact Sheet: 2025 Social Security Changes,” October 2024,https://www.ssa.gov/news/press/factsheets/ colafacts2025.pdf.
32 The average wage index in 2015 ($48,098.63) was about 3.5% larger than the 2014 average wage index of $46,481.52, and the contribution and benefits base is rounded to the nearest $300.
33 Because the national average wage index tends to increase faster than the inflation of prices, these elements that are indexed to the growth in average wages tend to increase faster than the elements that are tied to the COLA.
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Date Increase Was Paid
Amount of Increase
(percentage)
January 2008 2.3
January 2007 3.3
January 2006 4.1
January 2005 2.7
January 2004 2.1
January 2003 1.4
January 2002 2.6
January 2001 3.5
January 2000 2.5a
January 1999 1.3
January 1998 2.1
January 1997 2.9
January 1996 2.6
January 1995 2.8
January 1994 2.6
January 1993 3.0
January 1992 3.7
January 1991 5.4
January 1990 4.7
January 1989 4.0
January 1988 4.2
January 1987 1.3
January 1986 3.1
January 1985 3.5
January 1984 3.5
July 1982 7.4
July 1981 11.2
July 1980 14.3
July 1979 9.9
July 1978 6.5
July 1977 5.9
July 1976 6.4
July 1975b 8.0
Source: See Social Security Administration (SSA), “Historical Background and Development of Social Security,” http://www.socialsecurity.gov/history/briefhistory3.html, for data prior to 1975; and SSA, “Social Security Cost- Of-Living Adjustments,” http://www.socialsecurity.gov/oact/COLA/colaseries.html, for data since 1975. a. Originally computed as 2.4%, the cost-of-living adjustment payable in January 2000 was corrected to 2.5% under P.L. 106-554.
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b. First automatic cost-of-living adjustment began.
Table 4 provides a comprehensive summary of all ad-hoc legislative COLAs to Social Security benefits before automatic adjustments began in July 1975. The first increase occurred in October 1950, 10 years after Social Security benefits were first paid in 1940. At that time, Social Security benefits were increased by 77%. After 1950, smaller increases were granted by separate legislation at irregular intervals. Table 4 shows the percentage increases and the dates from which these increases were paid. As noted, in 1974 the increase occurred in two steps: an increase of 7% was paid from April 1974 until June 1974, and an increase of 11% was paid from July 1974 onward. Both increases used February 1974 as the base level. Authorization for the automatic benefit increase beginning in 1975 appears as part of P.L. 92-336.
Table 4. Social Security Cost-of-Living Adjustments Prior to Automatic Adjustments
(Pre-1975)
Date Increase Paida Amount of Increase
(percentage) Public Law
July 1974 11%b P.L. 93-233
April 1974 7b P.L. 93-233
October 1972 20.0 P.L. 92-336 c
February 1971 10.0 P.L. 92-5
February 1970 15.0 P.L. 91-172
March 1968 13.0 P.L. 90-248
February 1965 7.0 P.L. 89-97
February 1959 7.0 P.L. 85-840
October 1954 13.0 P.L. 83-761
October 1952 12.5 P.L. 82-590
October 1950 77.0 P.L. 81-734
Source: Created by CRS using data from SSA, Annual Statistical Supplement, 2017, Table 2.A19, https://www.ssa.gov/policy/docs/statcomps/supplement/2017/2a8-2a19.html#table2.a19, and SSA, “Historical Background and Development of Social Security,” https://www.ssa.gov/history/briefhistory3.html. a. The increase was effective the month prior to the month in which the increase was paid.
b. In 1974, an increase was applied in two steps. For April, May and June, a limited-duration increase was paid at 7% from the base level as of February 1974. After July, an increase of 11%, from the base level in February 1974, was paid.
c. In January 1975, automatic benefit increases begin and are indexed to the CPI-W. This change was authorized in 1972 by P.L. 92-336.
Author Information
T. Lynn Sears Analyst in Social Policy
Tamar B. Breslauer
Senior Research Librarian
Social Security: Cost-of-Living Adjustments
Congressional Research Service 94-803 · VERSION 42 · UPDATED 10
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