Investopedia

Continue to Site »

Cost Of Living Adjustment - COLA

Filed Under » , , ,
Dictionary Says

Definition of 'Cost Of Living Adjustment - COLA'

An adjustment made to Social Security and supplemental security income in order to adjust benefits to counteract the effects of inflation. COLAs are generally equal to the percentage increase in the consumer price index for urban wage earners and clerical workers (CPI-W) for a specific period.
Investopedia Says

Investopedia explains 'Cost Of Living Adjustment - COLA'

For example, if Kevin received $10,000 last year for Social Security benefits and COLAs for this year were 4.1%, then his benefits for this year would be $10,410.

During the 1970s, inflation was really high, and as a result compensation related contracts, real estate contracts and government benefits, led to the popularized usage of COLAs to protect against inflation.

Articles Of Interest

  1.

    Maximize Your Social Security Benefits

    The plan's cost of living adjustments can provide protection against inflation.

  2. Curbing The Effects Of Inflation

    Your investments suffer when general price levels rise. Learn how you can control the damage with IPSs.

  3. How Do Your Finances Stack Up?

    We look at the average consumer numbers, so you can get some perspective on how you spend your hard-earned dollars.

  4. How Much Social Security Will You Get?

    You've been paying in for years - now it's time to find out what the system owes you.

  5. The Minimum Wage: Does It Matter?

    Despite paying one of the highest minimum wages in the world, the minimum wage is a perpetual hot potato among politicians in the United States.

  6. Pension Protection Act Of 2006 Becomes Law

    Learn how the passed bill can help you save more for retirement.

  7. Top 6 Myths About Social Security Benefits

    Misinformation on retirement benefits is common. We'll set the record straight.

  8. Common Risks That Can Ruin Your Retirement

    These unexpected bumps can sideline your post-work plans and prevent you from riding out your assets.

  9. What is inflation and how should it affect my investing?

    Inflation, an economic concept, is an economy-wide sustained trend of increasing prices from one year to the next. The rate of inflation is important as it represents the rate at which the real ...

  10. Why The Consumer Price Index Is Controversial

    Find out why economists are torn about how to calculate inflation.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  2. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  3. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  4. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  5. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.

  6. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.
Trading Center