Social Security COLA Changes Since 1975: How They Affect SSD Benefits

Social Security COLA changes since 1975

In 1975, the Social Security Administration began reviewing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The SSA does this to determine annual cost-of-living adjustment changes (COLA) for disability beneficiaries. Think of this adjustment as a small “raise” that people see in their disability checks. Social Security COLA changes varied significantly over recent decades. However, some years didn’t see any COLA updates at all. It’s interesting to track these Social Security COLA changes, since they impact millions of Americans.



Is There a Social Security COLA Change for 2019?

Yes! This year’s COLA update is bigger than last year’s (2.8% for 2019 vs. 2% for 2018). Here’s how it will affect anyone currently approved for federal benefit payments:

  • SSDI beneficiaries – maximum monthly payment goes up to $2,861; average disabled worker payment increases to $1,234/month. The average disabled worker with a spouse and one or more dependent children will see their average SSDI benefits rise to $2,130/month.
  • SSI beneficiaries – maximum monthly individual benefit rises to $771/month; for couples, it’s $1,157/month.

Expect to see your increased benefit payment on the first, second or third Wednesday in January 2019 (depending on your birth month).

How Did the SSA Calculate 2018’s Social Security COLA Change?

Social Security COLA equals index growth from the highest Q3 average CPI-W recorded (usually the previous year) to the average CPI-W for Q3 this year. In plain English, the CPI tracks inflation and how much prices changed over 12 months. Let’s say in 2016, gas cost $2.14 per gallon. But in 2017, I paid $2.42 per gallon for gas. The CPI-W averages how much that gas cost consumers in every U.S. state. Then, the CPI-W converts that number into a percentage. (This annual CPI calculation also includes average price for services and wages in the U.S.)

This means in September 2017, people that track CPI-W saw average prices go up about 2% over September 2016 prices. So in October 2017, the government approved a 2% Social Security COLA raise. This 2% higher Social Security COLA payment was effective from January 2018 through January 2019. If average prices for goods, services and wages fall or stay the same, there’s no Social Security COLA increase. But if prices go up, then Social Security COLA rises again.

Before 1975, legislation set any increase in disability benefit payments. Since 1975, the SSA uses the CPI-W to determine any annual Social Security COLA changes.

Why Isn’t There A Social Security COLA Raise Every Single Year?

You’re probably thinking, “prices still keep going up every year. Why don’t my checks go up, too?” Here’s why: If average prices go down or stay the same the next year, there’s no Social Security COLA increase. Here are the most recent years without a COLA increase (or payments rose less than 1%):

  • 2009
  • 2010
  • 2015
  • 2016 (.3% increase)

To see each year’s Social Security COLA change percentages, take a look at this table on the SSA’s website.

Higher Social Security COLA Changes In Decades Past

When these Social Security COLA adjustments began in the mid-1970s, they were significant. Annual inflation was extremely high in the 1970s (much higher than it is today). So, any Social Security COLA changes reflected that high inflation rate. For example, in 1975, benefits rose 8% over the previous year. Then in 1979, they increased another 9.9%. Social Security COLA saw a record 14.3% increase in 1980, then that amount rose another 11.2% in 1981. Since that first decade using the new CPI-W calculation formula, most Social Security COLA increases seemed steady, but fairly low. Throughout the 1980s, Social Security COLA rose between 1%-4% every year. The biggest COLA increases since then happened in 1990 (5.4% increase) and 2008, which saw a 5.8% raise in benefits.

With no measurable COLA changes from 2015-2016, many disability beneficiaries welcomed the 2% increase they saw in January’s checks. According to the Congressional Research Service, the most recent COLA change added $27 more in monthly Social Security retirement benefits, on average. That brought the average Social Security benefits payment from $1,377 per month in 2017 up to $1,404 in 2018.

Whose Benefits Go Up With Every COLA Increase?

Each year’s COLA impacts retired workers receiving Social Security payments, those receiving Supplemental Security Income (SSI) and disabled veterans. Social Security COLA doesn’t directly impact federal military retirement program benefits. However, these programs use the same timeframe and measuring formula as the SSA to compute the next year’s payment amounts.

About 72% of benefits paid from the Social Security Administration go to retired workers, their spouses and children. Another 16% goes to disabled workers, their spouses and children.

More than one in four 20-year-olds today will become too disabled to work before full retirement age. Yet in January 2018, only 5% of Americans received disability benefits from the SSA. Nearly 3x as many Americans (about 51 million people) currently receive Social Security retirement or survivors’ benefits.

You May Qualify for Legal Assistance

Wondering if you might qualify for SSD benefits this year? Many applicants find the claim paperwork confusing. Plus, it can take weeks or months to complete these forms. We can connect you with a Social Security lawyer who can answer your questions for free. Unless you have a terminal illness, a lawyer will always improve your chances of winning benefits. Our disability advocates and lawyers work on contingency, so they get paid nothing unless you win benefits. On average, 38% of people who apply for SSD get denied for making simple paperwork mistakes. You’re more likely to win benefits and get paid faster if you apply with an attorney’s help. And if the SSA denies your claim, a lawyer can handle your appeal.

Ready to see if you may qualify for legal help with your claim? Click the button below to start your free disability benefits evaluation now.

Get Your Free Benefits Evaluation