The cost-of-living increased 1.5 percent in 2014. This figure is used as a basis for increasing the amount of Social Security benefits that beneficiaries receive. It is directly related to the Consumer Price Index.
This adjustment began in the 1970s, when inflation was very high. The cost-of-living increase is used to protect against the negative effects of inflation. The CPI is measured every month, and the cost-of-living adjustment is made in January each year.
The rate has been as low as 0 percent and as high as 14.3 percent in 1980. Generally, it runs between 1 and 5 percent, but it remained unchanged in 2010 and 2011.