Will 2021's Social Security COLA Be Similar to This Year's Disappointing Raise?
Each year, millions of Social Security recipients eagerly await news of a cost-of-living adjustment, or COLA. Introduced back in the 1970s, the purpose of automatic COLAs is to help seniors on Social Security maintain their buying power in the face of inflation.
But don't misunderstand the "automatic" component involved. Some years, seniors don't actually get a COLA, since raises are based on fluctuations in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
In a nutshell, when the cost of common goods and services increases, Social Security benefits typically go up. When that cost remains stagnant, benefits can stay the same or move upward only slightly (thankfully, they can't go down from one year to the next).
Source Fool.com
