A "COLA letter" refers to the notice about a Cost-of-Living Adjustment, an annual increase to benefits (like Social Security or pensions) to keep pace with inflation, protecting purchasing power as prices rise. These letters, often from the Social Security Administration (SSA), inform beneficiaries of the new, higher benefit amount, usually mailed in December for payments starting in January.
History of Automatic Cost-Of-Living Adjustments
The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation.
Since 1975, Social Security general benefit increases have been cost-of-living adjustments or COLAs. The 1975-82 COLAs were effective with Social Security benefits payable for June in each of those years; thereafter COLAs have been effective with benefits payable for December.
Most retirees are eligible for COLA starting at the age of 62 under one of these federal retirement programs: Federal Employees Retirement System (FERS) FERS Special. Civil Service Retirement System (CSRS)
The Social Security Administration (SSA) estimates that the average retirement benefit will rise by about $56 a month, from $2,015 to $2,071, starting with the payments going out in January 2026. (SSI recipients will get their first COLA-boosted payment Dec. 31.)
Unless it's required by law, each company can decide whether to offer this benefit and how much to change salaries for COLA. In 2023, 80% of employers planned to provide base pay increases to cover inflation. Employers must offer a cost-of-living salary adjustment for every employee.
You get two Social Security checks in December if you receive Supplemental Security Income (SSI), not regular Social Security, because the January payment gets moved to late December (usually Dec 31) since January 1st (New Year's Day) is a federal holiday, resulting in a December 1st payment and a December 31st payment for January's benefits, with the later one often including the COLA increase.
COLA is an annual cost-of-living increase that begins the second calendar year after retirement and helps your retirement benefit keep up with the rate of inflation. Eligible retirees, including survivors and beneficiaries, will receive information in April for their May 1 retirement check.
The extra $144 added to Social Security usually comes from the Medicare Part B Giveback benefit, offered by some Medicare Advantage (Part C) plans, which pays back some or all your Part B premium, showing up as extra money in your check if it's deducted from your Social Security. To qualify, you need Original Medicare (Parts A & B), pay your own Part B premium, live in a plan's service area, and enroll in a specific Medicare Advantage plan that offers this "rebate," with the amount varying by plan and location.
Key takeaways
Social Security is a federal program that provides income to retirees, survivors of deceased workers and disabled people. The average Social Security check for retirees is around $2,000 per month — slightly higher than the average benefit for survivors and people with disabilities.
Recipients will be able to check their COLA notices by visiting their my Social Security account online, or by waiting for the one-page paper notice to arrive in the mail, beginning in December. To receive a digital notice, be sure to log in to you my Social Security account and opt out of the mailing by November 19.
Yes, Social Security recipients received a Cost-of-Living Adjustment (COLA) for 2025, but the bigger news is that they are getting a larger 2.8% COLA for 2026, announced in October 2025, which began with January 2026 payments, increasing average benefits by about $56 per month. The 2025 COLA was a smaller 2.5% increase, while the 2026 adjustment reflects moderating inflation, leading to higher payments starting in the new year.
A raise is typically merit-based and reflects an employee's performance or contribution to the company. On the other hand, a cost of living adjustment (COLA) is an increase in an employee's salary or hourly wage designed to keep their spending power consistent with inflation or other economic factors.
How much money you can have in the bank before losing benefits depends entirely on the specific benefit program, with needs-based programs like Supplemental Security Income (SSI) having strict limits (around $2,000 for individuals) while earnings-based Social Security Disability Insurance (SSDI) and Retirement benefits typically have no asset limits. Other programs like SNAP (food stamps) or state Medicaid also have their own resource rules, so it's crucial to check your specific program's guidelines for its asset caps and exclusions.
About 75 million Social Security and Supplemental Security Income beneficiaries will benefit from the 2.8% cost-of-living adjustment for 2026, according to the Social Security Administration. Almost 7.5 million individuals who rely on SSI began receiving their checks as of Dec. 31, according to the agency.
The answer is yes, you can collect Social Security and a pension at the same time.