Most people who get retirement benefits from Social Security get the bulk of their income from their monthly benefits. Because they don't have many other sources of money to pay for living expenses, the annual cost-of-living adjustments (COLAs) that Social Security gives participants every January play a vital role in helping people make ends meet -- especially as the expenses they have to pay inexorably rise.

Over the past decade, Social Security has been pretty stingy in the COLAs it gives to retirees. But 2019 could be different. With a couple months left to go before we get a definitive answer, early indications suggest that Social Security benefits could go up by a greater amount than retirees and other participants have seen since 2012.

Graph showing Social Security cost-of-living adjustments for the past 10 years.

Data source: Social Security Administration. Chart by author. Note: Graph indicates increase that took effect in January of stated year. Estimate for 2019 is based on July inflation data and assumes flat Consumer Price Index readings for August and September.

Social Security calculates each year's COLA by looking at the Consumer Price Index from July through September and comparing it to the previous year's levels. So far, only the July figure is available, but if that reading were to stay flat in August and September, it would give retirees a 2.7% increase come January. If price levels rise this month and the next, then it's conceivable that the COLA could reach 3%.

The trade-off, of course, is the same rising levels of inflation that produce larger increases to Social Security benefits also end up forcing recipients to pay more for the essential goods that they need. But when the costs of the things that you need as an older American always seem to go up regardless of what government inflation figures say -- especially in areas like healthcare -- then getting a boost to your Social Security is at least a bit of a consolation.

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