Social Security COLA Estimated at 1.3% for 2021

If the COLA turns out to be 1.3%, it would be the fifth time since 2010 that seniors will see a very low, or even no, annual inflation adjustment. The COLA was zero in 2010, 2011 and 2016, and it was 0.3% in 2017.

"This is more evidence that our system to adjust benefits for inflation is broken," according to Johnson.

Over the past decade, annual COLAs have averaged 1.4% — less than half the 3% COLA average from 1999 to 2009.

COLA Calculations

Currently, the adjustment is tied to the percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which reflects prices paid by working adults under age 62 and gives greater weight to items like gas and electronics.

At the same time, this measure gives less weight to housing and medical expenses, which are the biggest areas of spending for older consumers, the Senior Citizens League says. It also includes Medicare premiums, which have been rising in price in recent years. 

The U.S. Government Accountability Office, which reviewed the measurements this summer, concluded that the U.S. Bureau of Labor Statistics "faces accuracy, timeliness and relevancy challenges developing consumer price indexes (CPI) for subpopulations of blue-collar workers and older Americans."

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