COLA History

The upcoming 1.7 percent cost-of-living adjustment (COLA) begins with benefits that more than 56 million Social Security beneficiaries receive in January 2013. Increased payments to more than 8 million Supplemental Security Income (SSI) beneficiaries will begin on December 31, 2012. 

COLA increases are now such an accepted feature of Social Security that it is difficult to imagine a time when there were no COLAs. 

Payment of monthly Social Security benefits began in January 1940. At that time, and for many years afterward, cost-of-living adjustments did not exist. A person’s benefit amount when starting Social Security was the amount they could expect to receive for life.  

It was not until the 1950 Amendments that Congress first legislated an increase in benefits. Beneficiaries at the time had their payments recomputed effective for September 1950 and increases appeared for the first time in the October 1950 checks. A second increase was legislated for September 1952. Together these two increases almost doubled the value of Social Security benefits for existing beneficiaries. From that point on, benefits were increased only when Congress enacted special legislation for that purpose.  

Legislation In 1972 changed this by providing, beginning in 1975, for automatic cost-of-living adjustments (COLAs) based on the annual increase in consumer prices.