A Cost-of-Living Adjustment (COLA) is an increase made to Social Security and Supplemental Security Income (SSI) to counteract the effects of rising prices in the economy, called inflation. The COLA is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for a specific period. The Social Security Administration applies a COLA to payments made to those receiving Social Security and Supplemental Security income (SSI) each year. The COLA is calculated by applying the percentage increase in the CPI-W from the third quarter of one year to the third quarter of the following year. The COLA for 2023 is 8.7% . 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.