Evolution of the Social Security COLA adjustment
The Social Security Cost of Living Adjustment (or “COLA”) as we know it today is not at all what it looked like years ago. As a matter of fact, for the first decade of the Social Security program’s existence, there was no such thing as a COLA increase. Then program changes in 1950 gave Congress the authority to bestow COLA increases on beneficiaries as they saw fit, which was often sporadic and without any real formula to guide increase levels. And this was the norm until 1975, when the current system of granting an automatic increase based upon inflation as measured by the CPI-W (the Consumer Price Index for Urban Wage Earners and Clerical Workers) was enacted. While the CPI-W is arguably not the ideal measure of inflation for senior citizens, it is nevertheless a welcome respite from the old days of not granting a COLA at all, or basing it on Congressional whim. This Motley Fool article by Sean Williams describes the evolution of the Social Security COLA increase from the inception of the program until today. Click here to read more.
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