A Cost of Living Allowance (COLA) is a financial adjustment provided to employees to help them maintain their purchasing power in areas where the cost of living is higher. This allowance is often based on factors such as inflation and local living expenses, ensuring that workers can afford basic necessities like housing, food, and transportation. COLAs are commonly used by employers, especially in industries where employees may be relocated to different regions or countries. Government agencies, such as the Social Security Administration, also provide COLAs to beneficiaries to help them cope with rising costs over time.