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COLA


Definition
Cost of Living Adjustment. An annual adjustment in wages to offset a change (usually a loss) in purchasing power, as measured by the Consumer Price Index. The Consumer Price Index is used rather than the Producer Price Index because the purpose is to offset inflation as experienced by the consumer, not the producer.

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Social Security Benefits and InflationThe COLA (cost of living adjustment) is perhaps Social Security's most powerful long-term planning benefit. For an 85-year-old person who started benefits 20 years ago, cumulative COLAs now provide mo ... Read more


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