Social Security benefits will arguably lose buying power next year because the 2.5% COLA understates inflation.

Still, the recent news raises a handful of questions among the retirees it impacts the most. Here are a few things you might want to know about these annual cost-of-living adjustments. The annual COLA isn't a number arbitrarily decided by the Social Security Administration.

If it weren't for Social Security, millions of older Americans would no doubt struggle to keep up with their ongoing expenses. That's what makes Social Security's cost-of-living adjustments (COLAs) so important.