The Social Security Administration recently announced that there will be a 2.8 percent cost-of-living adjustment (COLA) in retirees’ Social Security benefit payments beginning Jan. 1. The COLA is an increase—if any—as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) prepared by the Bureau of Labor Statistics. CPI-W went up 2.8 percent in the third quarter of 2018 compared to the third quarter of 2017.

Social Security benefits are adjusted annually to protect retirees from the effects of inflation. In 1972, Congress enacted a law that provided for automatic COLAs, beginning in 1975, as part of Social Security amendments. Prior to this law, the increases had to be enacted by Congress on an ad hoc basis. In the early 1970s, inflation was relatively high, so the provision in 1972 provided for an automatic COLA only if the increase in the CPI-W was at least three percent, also known as the “3-percent trigger.” Inflation began growing at a comparatively slower rate in the mid-1980s. As a result, Congress eliminated the ‘trigger’ in 1986; otherwise there would have been no COLA that year.

The increase in the COLA also affects the earnings limit for those collecting early Social Security. The earnings limit is the amount an early Social Security recipient can earn before a reduction in benefits takes place. The current earnings level is $17,040. This will rise to $17,640 in 2019.

The chart below shows the increases in Social Security over the last 15 years:

Year                  Increase

2005                     2.7%

2006                     4.1%

2007                     3.3%

2008                     2.3%

2009                     5.8%

2010                     —

2011                     —

2012                     3.6%

2013                     1.7%

2014                     1.5%

2015                     1.7%

2016                     —

2017                     0.3%

2018                     2.0%

2019                     2.8%

Should you have any questions regarding Social Security payments, visit

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