How to Raise Your Social Security Benefit: COLA

Not so long ago, baby boomers viewed Social Security as a retirement program for old folks. High-earning boomers felt that Social Security didn’t apply to them because the monthly checks were small and they believed the system wouldn’t be around when they retire.

Now the tide has shifted. Nearly all boomers have embraced Social Security, and they’re on a mission to get the most out of the system. Maximizing Social Security has practically become a national obsession, especially among high-earners.

There are three ways to increase your benefit and the easiest of these three methods actually requires nothing on your part.

Cost-Of-Living Adjustments (COLA)

In 1975 Congress authorized the automatic cost-of-living adjustment based on the annual increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of one year to the third quarter of the following year.

The annual COLA is applied beginning with December benefits, which are payable in January. Most of the news reports that come out each year when the COLA is announced talk about the high cost of living and whether the COLA increase is enough for seniors on fixed incomes. What is not so well publicized is how the COLA can impact a person’s Social Security benefit over time since the higher the benefit, the higher the COLA increase will be.

How a COLA Affects Social Security Income

Let’s take someone with a roughly average benefit of $1,300. If we apply a 2.6 percent COLA to this benefit then the benefit goes up to $1,333. That’s a $33 increase per month or $396 per year.

The primary insurance amount (PIA) is the benefit a person would receive if he/she elects to begin receiving retirement benefits at his/her normal retirement age. A maximum earner with a primary insurance amount (PIA) of $2,800 would get a benefit increase of $73 per month or $876 per year. If that same maximum earner were to delay his benefit until age 70, he’d get an increase of $96 per month or $1,152 per year. ($2,800 x 1.32 x 0.026 = $96).

These may not seem like large amounts, but if you multiply them out and compound them over many years, they add up.

So, as long as the CPI-W is increasing from year to year your Social Security Benefits will continue to go up as well, and you don’t have to do a thing.

There may be more ways to increase your Social Security income if you also qualify for spousal benefits, divorced-spouse benefits, or survivor benefits. It’s also important to recognize that this is a general rule of thumb, and there’s no guarantee the advice here works well within the context of your overall financial plan and greater retirement goals.

Mark Singer, CFPⓇ, lives in Swampscott and has been in the financial industry for over three decades. If you have any questions contact him at 781.599.2660 or This content was developed in conjunction with Elaine Floyd, CFP®.

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