The way Social Security is set up is each year there's a cost-of-living adjustment.

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The way the system works is you automatically get a cost-of-living adjustment based on the inflation rate.

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Earlier this month, President Barack Obama proposed to tweak the formula for calculating the cost-of-living adjustment, or COLA, for Social Security recipients.

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Starting at the end of December, millions of Social Security recipients will start to see higher payments due to the cost-of-living adjustment (COLA) increase.

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We expect that people will be getting a cost-of-living adjustment this year because there has been some significant inflation, particularly in food and fuel prices.

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That's why the cost-of-living adjustment did not kick in.

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"We should be looking for where is the best broad-based technical agreement on what is the most accurate cost-of- living adjustment, " said Gene Sperling of the National Economic Council, speaking on Fox.

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In February, Colorado lawmakers passed a bill that reduced the pension system's cost-of-living adjustment from a fixed 3.5% a year to a maximum of 2% but possibly less for current and future retirees.

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This has become a topic of fierce debate on the state and local levels as well, where about 86 percent of full-time government workers or about 55 million employees are covered by old-fashioned pension plans that guarantee retirees a certain amount of income plus an annual cost-of-living-adjustment tied to the CPI.

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