Second, COLA at Different Ages
COLA: Before 62
Before you turn 62, you don’t need to stress too much about COLA since it doesn’t impact your Social Security benefits yet. However, as you get closer to what Social Security calls your “full retirement age” (usually around 67), it’s smart to start paying more attention to how COLA might affect your future benefits.
COLA: 62 through Full Retirement Age*
Age 62 is key for Social Security. It’s when you can start claiming benefits. But if you claim before your full retirement age, your monthly payments will be permanently reduced. So, the earlier you claim, the less you’ll get each month for life. Full retirement age is when you can claim your full, unreduced benefits.
At 62, COLA adjustments also start applying to your benefits. Even if you delay claiming Social Security, these adjustments will increase your benefits from age 62 onward. This means if you wait to claim, you’ll eventually receive a higher amount due to these annual adjustments.
*Full Retirement Age (FRA) is the age at which you are entitled to 100% of your Social Security benefits. The FRA varies depending on the year you were born, ranging from 65 to 67. Go to ssa.gov to find out your FRA.
COLA: After Full Retirement Age
Once you reach full retirement age, your benefits keep growing each year with the COLA rate. If you wait to claim your benefits, you’ll see the effects of COLA from age 62 until you decide to claim. By waiting until age 70, your monthly benefit could be higher thanks to both COLA and delayed retirement credits. These credits are extra amounts added to your benefits for each year you wait past full retirement age, up to age 70.
For example, if your full retirement-age benefit at 67 is $2,000, but you wait until 70 to claim, your benefit amount would be $2,480, but with that you also receive 8 years of compounded COLAs (let’s say 2.5%) which takes your total COLA-adjusted benefit to $2,906.
| Age |
2024 Benefit Amount |
Annual COLA Adjustment* |
Cumulative COLA Adjustment |
Total COLA Adjusted Benefit |
|---|
| 62 |
$1,400 |
$35 |
$35 |
$1,435 |
| 63 |
$1,500 |
$37 |
$72 |
$1,573 |
| 64 |
$1,600 |
$40 |
$112 |
$1,713 |
| 65 |
$1,732 |
$43 |
$156 |
$1,888 |
| 66 |
$1,866 |
$47 |
$202 |
$2,068 |
| 67 |
$2,000 |
$50 |
$252 |
$2,252 |
| 68 |
$2,160 |
$54 |
$306 |
$2,466 |
| 69 |
$2,320 |
$58 |
$364 |
$2,684 |
| 70 |
$2,480 |
$62 |
$426 |
$2,906 |
In this table, the hypothetical benefit at Full Retirement Age (FRA) is $2,000. The bar chart shows that if you file early, your benefit is reduced, but if you wait longer, your benefit increases. The Annual COLA Adjustment column reflects a 2.5% increase to the 2024 benefit amounts. The Cumulative COLA column shows how these adjustments add up over the years. The Total COLA Adjusted Benefit column illustrates the overall impact of COLA over time. For example, you might compare taking a $1,400 benefit at age 62 versus waiting until age 70 to receive a COLA-adjusted benefit of $2,906.
*Assumptions: 2.5% COLA every year and benefit amount at FRA at 67 is $2,000. Visit ssa.gov to see your benefit amount.
Third, How COLA Fits in With Your Retirement Income
The average 67-year-old retiree gets about $22,600 a year from Social Security, but most retirees need around $75,020 to live comfortably.2 This leaves a big gap that many need to fill for a comfortable retirement.
Since we can’t control Social Security and COLA, it’s important to talk with your financial professional about what you can manage. Whether it’s through brokerage accounts, 401(ks, or other investments, you and your financial professional should find the most effective ways to boost your retirement savings.
As people are living longer, it’s crucial to understand the factors that can impact your retirement income. Knowing how COLA affects your benefits at different ages is key.
Next Step
Talk to your financial professional about your retirement plan and how Social Security and COLA fit into it.
