Keeping our fridge stocked, keeping the lights on and covering bills are things we are required to do. With that being said, millions of Americans rely on Social Security to get this done. That’s why October is one of the most important months of the year for retirees and people with disabilities.
Every October, the Social Security Administration (SSA) announces the cost-of-living adjustment (COLA) for the coming year. The COLA is meant to keep up with the pace of inflation.
What Exactly Is COLA?
COLA stands for cost-of-living adjustment.
Here’s how it works:
The COLA is calculated using third-quarter inflation data based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W is published monthly by the Bureau of Labor Statistics, and it tracks changes in everyday costs affecting the typical American worker.
Why October Is the Big Month
Even though discussions relating to Social Security happen throughout the year, October is the month when the official COLA decision is made. This is when beneficiaries will know how much their check are increasing.
This announcement matters because it:
- Tells you exactly how much more money you’ll get each month
- Helps you plan your budget for next year
How Inflation Shapes Your Raise
The COLA result is dependent on inflation. If inflation increases, COLA increases. Should inflation cool down, COLA will decrease.
October might either be a time of delight or disappointment.
What It Means for Your Check
Let’s say your monthly Social Security benefit is $1,700.
- If the COLA is 2%, you’d get about $34 more per month.
- If the COLA is 3%, you’d see an extra $51 per month.
It may not seem like much at first glance, the little adds up at the end of the year.
How to Prepare for the COLA Announcement
- Follow the News
In October, the SSA will make the official COLA figure public. Watch for updates so you can anticipate what’s ahead.
- Review Your Budget
Look at your monthly expenses and see where you may need to adjust. Even if the additional money might have an impact, it’s a good idea to budget appropriately and have reasonable expectations about how much it will actually go.
- Consider Other Income Sources
Finding additional sources of income outside of Social Security might also be beneficial, if you are able to do so. To increase your savings, you might need to continue working while getting benefits or perhaps start a modest side business.
- Use Your My Social Security Account
Log into your online account to see your updated benefit amount once the COLA is applied.
The Bigger Picture
The yearly COLA announcement could mean the difference between just getting by and actually living comfortably.
Beneficiaries must remember that the COLA is not always perfect, it’s simply just a reflection of the economy’s impact on the everyday lives of Americans. Retirees are urged to plan ahead and consider savings instead of relying on just Social Security.
Final Word
Some of are waiting for Halloween as others are waiting for the COLA announcement as October approaches. This is a time when government will reveal whether Social Security checks will go a little further than usual.
If you figure out how to get the most out of your Social Security, you will most likely retire with peace of mind and financial security.
As October comes closer, attention moves towards the SSA. Millions of Americans are eagerly awaiting the announcement. Be sure to follow updates and plan ahead!
Seek assistance if you require any further information on your benefits. Visit the official SSA page