Essential Insights into Social Security COLAs for Retirees
What Are Social Security COLAs?
Social Security COST-OF-LIVING ADJUSTMENTS (COLAs) play a vital role in maintaining the purchasing power of retirees. These adjustments are calculated based on the average year-over-year increase in inflation, primarily utilizing the CPI-W index, which reflects the cost of living changes for wage earners.
Why COLAs Matter for Retirees
- Understanding COLAs ensures retirees can better plan their finances.
- COLAs provide a necessary buffer against inflation.
- The adjustments are critical for those dependent on fixed incomes.
Key Insights on COLAs
- Adjustments are typically announced each October.
- Historical trends show varying adjustment rates over the years.
- Retirees should regularly review their benefits.
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