Do You Understand These 3 Critical Facts About Social Security COLAs?
The Motley Fool
by newsfeedback@fool.com (Matt Frankel, CFP)February 25, 2026
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Understanding Social Security COLAs: Key Facts You Should Know
Social Security Cost-of-Living Adjustments (COLAs) are designed to help beneficiaries keep pace with rising living expenses, but there are important details that many people overlook. While the concept of COLAs is widely recognized, their mechanics and implications are less understood. This article reveals three critical facts about Social Security COLAs, including how they are calculated, why they vary so significantly over time, and what this means for recipients planning for retirement or managing current benefits.
The annual COLA announcement in October may seem routine, but its timing is tied to specific economic indicators. The adjustment is based solely on inflation data from the third quarter of the year (July, August, and September). This three-month window determines the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which serves as the foundation for COLA calculations. By focusing on recent inflation trends, the Social Security Administration aims to reflect current economic conditions when setting benefit adjustments.
The variability of COLAs over the past 30 years highlights the challenges of aligning benefits with inflation. While some years have seen significant increases—like the 8.7% jump in 1990—there have also been years with no adjustment at all, such as in 2010 and 2011. This unpredict
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Originally published on The Motley Fool on 2/25/2026