Social Security COLA: How Your Annual Raise Is Calculated
Watch on YouTube Every October, SSA announces the Social Security Cost-of-Living Adjustment (COLA) — but the formula behind it is more specific than most people realize. This episode covers CPI-W (the index used and why it may undercount retiree costs), the Q3 three-month formula window that determines the percentage, recent COLA history from 2020 through 2025 (including the 8.7% record in 2023), the CPI-E debate, how COLA interacts with IRMAA Medicare surcharges, and the hold-harmless rule that protects most but not all beneficiaries. Full playlist: Social Security (US - 2026).
▶ Watch next: Social Security Delayed Credits: The 8% Per Year Bonus https://www.youtube.com/watch?v=F6W2nVZOtJI
📺 Full playlist: Social Security (US - 2026) https://www.youtube.com/playlist?list=PLlIAFxS296491LWfYsLp6anRyo6_DO_pI
Chapters
Every October, SSA announces next year's Cost-of-Living Adjustment. The formula: average CPI-W for July through September compared to the same three months of the previous adjustment. It sounds simple but has quirks — CPI-W weights things retirees don't actually buy, the alternative CPI-E has been debated for decades, and the 2022-2024 inflation years produced wildly different results.
Key Topics
- What CPI-W measures and who's in the "urban wage earners" basket
- The three-month formula window (Q3 July-Aug-Sep)
- When COLA is announced, when it applies, and the first check it shows up in
- Recent COLAs from 2020 through 2026 and what drove them
- The CPI-E debate — elderly spending patterns differ, but Congress hasn't switched
- How COLA interacts with IRMAA and the hold-harmless rule
- Why some retirees' checks don't rise at all despite a big COLA