# How the Social Security COLA Is Set: From the 1973 Law to the Third-Quarter CPI-W Formula

- URL: https://whatledto.com/events/social-security-cola-mechanism
- Topic: Economy · Tags: Economy, Inflation, Retirement, Social Security
- Updated: Oct 14, 2026 · 3 dated entries

## Summary

Social Security benefit increases were once set through separate acts of Congress. Amendments enacted in 1973 made cost-of-living adjustments automatic and tied them to inflation, with the first automatic 8.0 percent increase payable in June 1975. A 1983 change moved the effective date to benefits payable for December, generally received in January. The statutory formula compares the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the current third quarter with the third quarter of the last year a COLA took effect, rounds the increase to the nearest tenth of a percent, and provides no COLA if the index does not rise.

## Timeline (newest first)

### 1983 — COLAs move to December: the third-quarter CPI-W becomes the yardstick, announced each October

From 1983 the adjustment has applied to benefits payable for December, paid in January. Under the formula a COLA equals the percentage increase in the average CPI-W for the third quarter of the current year over the average for the third quarter of the last year in which a COLA took effect, rounded to the nearest tenth of a percent, with no COLA if the index did not rise. That is why the September CPI-W release each October settles the number.

- Entry: https://whatledto.com/events/social-security-cola-mechanism#n1232 (Regulatory)
- Source: Social Security Administration, Office of the Chief Actuary · https://www.ssa.gov/oact/cola/latestCOLA.html — "A COLA effective for December of the current year is equal to the percentage increase (if any) in the CPI-W from the average for the third quarter of the current year to the average for the third quarter of the last year in which a COLA became effective. If there is an increase, it must be rounded to the nearest tenth of one percent."

### Jun 1975 — The first automatic COLA: 8.0 percent, payable for June 1975

The first adjustment under the new law was 8.0 percent, reflecting the inflation of 1974. From 1975 to 1982 COLAs took effect with benefits payable for June; before 1975 every increase had been set by legislation.

- Entry: https://whatledto.com/events/social-security-cola-mechanism#n1231 (Announcement)
- Source: Social Security Administration, Office of the Chief Actuary · https://www.ssa.gov/oact/cola/colaseries.html — "Since 1975, Social Security general benefit increases have been cost-of-living adjustments or COLAs. The 1975-82 COLAs were effective with Social Security benefits payable for June in each of those years; thereafter COLAs have been effective with benefits payable for December. Prior to 1975, Social Security benefit increases were set by legislation."

### 1973 — Legislation enacted in 1973 makes Social Security increases automatic cost-of-living adjustments

Until then every benefit increase was a separate act of Congress. The 1972 and 1973 Social Security amendments tied benefits to the Consumer Price Index instead, so that from 1975 the raise would follow measured inflation rather than a vote. The Social Security Act's section 215(i) still carries the formula.

- Entry: https://whatledto.com/events/social-security-cola-mechanism#n1230 (Regulatory)
- Source: Social Security Administration, Office of the Chief Actuary · https://www.ssa.gov/oact/cola/latestCOLA.html — "Legislation enacted in 1973 provides for cost-of-living adjustments, or COLAs. With COLAs, Social Security and Supplemental Security Income (SSI) benefits keep pace with inflation."

## Cause and effect

- COLAs move to December: the third-quarter CPI-W becomes the yardstick, announced each October led to Government shutdown pushes the 2026 COLA announcement from October 15 to October 24 [on https://whatledto.com/events/social-security-2027-cola#n376] (The third-quarter CPI-W formula means the September CPI-W release is needed to settle the COLA, so the shutdown's prevention of that release pushed the 2026 announcement back.)
- COLAs move to December: the third-quarter CPI-W becomes the yardstick, announced each October led to Two data points to go: August CPI-W due September 11, the official 2027 COLA on October 14 [on https://whatledto.com/events/social-security-2027-cola#n385] (Because the COLA is determined by the third-quarter CPI-W average, the September index described in the later entry completes the calculation for the October 14, 2026 announcement.)
- COLAs move to December: the third-quarter CPI-W becomes the yardstick, announced each October led to The 2027 COLA is 3.6 percent, worth $75 a month to the average retiree [on https://whatledto.com/events/social-security-2027-cola#n2146] (The formula says the September CPI-W release settles the COLA, and the 2027 COLA announcement states that its 3.6 percent figure followed the September CPI-W release that morning.)

## Who is involved

- Social Security Administration (regulator): Administers Social Security benefits and publishes the statutory COLA formula and historical adjustment series.

## Changelog

- Oct 14, 2026: Linked 1 entry with Social Security's Next Raise: From the 2.5% COLA to the 2027 Announcement.
- Sep 16, 2026: Linked 2 entries with Social Security's Next Raise: From the 2.5% COLA to the 2027 Announcement.
- Sep 14, 2026: Added 3 hand-verified entries by the editor.

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