The 20 Largest Social Security COLAs in History

Social Security Cost of Living Adjustments, or COLAs, are a lifeline for seniors. Without them, Social Security benefits would cease to be a viable source of support over the long term. That’s because there must be a mechanism for retirees to see their benefit amount increase over time. Otherwise, as the price of goods and services rose due to routine inflation, benefits would buy less and less each year until seniors found themselves in serious financial trouble.

The good news is, Cost of Living Adjustments prevent that from happening. When data from a consumer price index shows prices rising year-over-year (as calculated using an average of third-quarter data), retirement benefits are increased by the same percentage. So, if the CPI data shows prices are up an average of 2.00% year-over-year, retirees get a 2% raise.

In some years, COLAs are larger than in others — which makes sense because inflation in some years is higher than in others. Let’s take a look at the 20 largest COLAs in Social Security history, as per the Social Security Administration, so you can better understand how benefits have changed over time.

1. 1980: 14.3% COLA

In 1980, the COLA was the largest it has been since Social Security began using the current method of calculating benefit increases.

Before 1975, there was a different legislative process that was used to determine if retirees should get more money. However, shortly after the switch was made to the new formula, Social Security retirees experienced a record-setting cost-of-living adjustment that has not been matched since.

2. 1981: 11.2% COLA

The second-highest COLA in history came just a year after the biggest-ever benefit bump. This isn’t a surprise since it can take time for rampant inflation to cool.

Inflation during the early 1980s was driven by many factors, including an energy crisis triggered by a revolution in Iran, as well as tight monetary policy.

3. 1979: 9.9% COLA

Inflation was already starting its ramp-up in the late 1970s, resulting in a COLA that was significantly higher than later benefits increases would turn out to be.  Retirees got used to big COLAs when the new formula was introduced, but large raises would not always be forthcoming.

4. 2022: 8.7% COLA

The 2022 COLA is explained by one key phenomenon: COVID-19. Between lawmakers pushing stimulus checks and supply chain disruptions, prices surged and left people facing much higher monthly expenses. This led to one of the highest COLAs in a very long time.

5. 1975: 8% COLA

Continuing the trend, the mid-1970s and early 1980s were a time of very high inflation. The year 1975 was the first one in which the modern COLA calculation formula was implemented, and retirees immediately saw their payments rise by 8%, which was a pretty good start for retirees struggling with rising costs.

6. 1982: 7.4% COLA

Retirees were on a big winning streak when it came to benefit bumps in the 1970s and 1980s, with the year 1982 bringing with it yet another Cost of Living Adjustment topping 7.00%. This period of time was one of the longest streaks of large raises that retirees enjoyed. Of course, it’s worth remembering that a big raise means high levels of inflation, which is not necessarily a good thing.

7. 1978: 6.5% COLA

Although a 6.5% COLA is pretty generous, it was one of the smaller Cost of Living Adjustments that retirees received during this turbulent economic period in the country’s history.

8. 1976: 6.4% COLA

You may be starting to notice that the late 1970s and early 1980s were a time when COLAs were very high. This period in U.S. history was referred to as the “Great Inflation,” and it ushered in the Reagan Revolution.

9. 1977: 5.9% COLA

Retirees definitely saw big increases in benefits for years after the new COLA Formula was put in place — but it was the massive inflation the company was experiencing that led to this phenomenon.

10. 2021: 5.9% COLA

We’re back into the COVID era, as this was the period of time when the country was starting to really emerge from the darkest days of the pandemic and, unfortunately, enter into a sustained period of inflation that we’re still dealing with today. High inflation lead to a series of COLAs that were the highest in years.

11. 2008: 5.8% COLA

The year 2008 was another turbulent time for the U.S. as the country experienced the financial crisis driven by the collapse of the housing market. This year was the last one retirees would see a big raise for a while, as the 2009 and 2010 COLAs were among the few in history when benefits went up 0%.

12. 1990: 5.4% COLA

The Persian Gulf War and rising oil prices played a key role in causing the high levels of inflation in the 1990s, which resulted in big COLAs continuing.

13. 1989: 4.7% COLA

While this COLA was much smaller than the raises in the early 1980s, seniors still saw fairly large benefit bumps throughout the entirety of the 1980s.

14. 1987: 4.2% COLA

By the middle and end of the 1980s, COLAs were nowhere near what they were earlier in the decade — but inflation rates were still above the Fed’s 2% target, so COLAs were also still higher to reflect big year-over-year price increases.

15. 2005: 4.1% COLA

The 4.1% COLA in 2005 likely came as a welcome relief to seniors who had several years of raises below 3.00% between 2000 and 2005.

16. 1988: 4.0% COLA

Seniors throughout the 1980s were living in the best time in terms of consistently high COLAs, but of course, it is again worth remembering that high inflation isn’t good for seniors on the whole. While their Social Security benefits consistently went up, the buying power of savings and investments decreased as inflation surged, so these high raises weren’t necessarily great for their finances.

17.1991: 3.7% COLA

Continued inflation into the early 1990s saw COLAs that made the list of the top 20 highest Social Security raises, although these COLAs are far less impressive than the ones from the 1970s and 1980s.

18. 2011: 3.6% COLA

This COLA in 2011 was a welcome relief to seniors who went two years without a benefits bump. While COLAs should help retirees keep pace with inflation, there are questions as to whether they do, since they are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), and the spending habits of this group don’t perfectly match what retirees tend to spend money on.

19. 1983: 3.5% COLA

While this COLA is a competitive one by historical standards, it is one of the lower Cost of Living Adjustments retirees received in the 1980s.

20. 1984:  3.5% COLA

Finally, finishing off our list, retirees received a 3.5% raise in 1984, the same as the year prior, and still fairly generous despite being lower than what retirees got used to in the early 1980s.

All of these COLA numbers show that retirees do get generous raises in many years — but the benefit bump may not be enough, as the Senior Citizens League reports benefits have lost around 20% of buying power since 2010. Retirees need to budget carefully to ensure they are accounting for changes in the price of goods and services, and should work with a financial advisor to determine a safe withdrawal rate from savings to supplement the Social Security benefits they receive.

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