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Cost-of-Living Adjustment

Also called: COLA

What is a cost-of-living adjustment?

A cost of living adjustment (COLA) is the change in regular retirement or Social Security benefits after adjusting for inflation.

The most popular COLA is determined by the Social Security Administration to make sure retirees have the same purchasing power year over year. To calculate COLA, the Social Security Administration uses the consumer price index, or CPI, to measure inflation or increasing prices for goods and services.