A History of the Social Security COLA

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Social Security recipients will receive a 1.7 percent cost-of-living adjustment (COLA) in 2015.

The COLA is designed to protect benefits against inflation – but that protection hasn’t always been there.

When did COLAs begin, and how did they evolve to where they are today?

Howard Kossover, a Social Security Public Affairs Specialist in the Midwest, explains the history behind Social Security COLAs:

One of the many valuable aspects of Social Security benefits, the annual, automatic review of Social Security amounts for a possible cost-of-living adjustment (COLA) is now such an accepted feature of the program that it is difficult to imagine a time when there were no COLAs. However, such a time existed. Social Security beneficiaries did not originally receive cost-of-living adjustments.

Although the first SSA benefit was paid in January 1940, the first cost-of-living adjustment-related increase was not until 1950 followed by a second in 1952. Part of the 1950 Amendments, the first Social Security COLA was signed into law by President Truman. Neither of these two increases was automatic. Both times, Congress enacted special legislation for the purpose.

Automatic Social Security COLAs began in 1975, based on 1972 legislation. Signed into law by President Nixon, this legislation established automatic COLAs based on the annual increase in the consumer price index, if any. Since then the automatic cost-of-living adjustment has increased Social Security benefits in every year except 2010 and 2011. Learn COLA percentages for 1975-2014 at www.socialsecurity.gov/cola/automatic-cola.htm.

The 1.7 percent cost-of-living adjustment for 2015 begins with benefits that more than 58 million Social Security beneficiaries receive in January 2015. Increased payments to more than 8 million Supplemental Security Income (SSI) beneficiaries will begin on Dec. 31, 2014.

The highest COLA was in 1980, when Social Security recipients saw a 14.3 percent boost in their benefit.

Since the mid-90’s, however, COLAs have typically hovered between 1.5 percent and 4 percent.


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