Why Retirees Get a Social Security Raise Even When Congress Doesn't Act

"Prior to the mid-1970s, lawmakers had to vote in Social Security COLAs. But that policy changed so that beginning in 1975, COLAs became automatic. It was decided that instead of having Congress meet each year to make that decision, COLAs would be tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. So now, retirees are eligible for a Social Security raise even when Congress doesn't act."

"There are a few reasons why this change happened. First, lawmakers wanted to guarantee retirees some degree of financial stability by making sure that Social Security was eligible for a COLA each year. Secondly, it was decided that it would be too dangerous to put seniors in a position where they had to wait on lawmakers to debate a COLA each year, potentially delaying those increases."

Many older Americans rely on Social Security for retirement income and would be unable to pay their expenses without benefits. Beneficiaries also depend on cost-of-living adjustments (COLAs) to preserve purchasing power as living costs rise. Prior to the mid-1970s, Congress voted on COLAs annually, but beginning in 1975 COLAs became automatic and tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). COLAs are typically announced in October and take effect the following January. Automatic COLAs were adopted to guarantee financial stability, avoid dangerous delays from annual political debates, and remove partisan influence by basing increases on objective data.

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