The cost of living adjustment (COLA), a percentage increase in beneficiaries’ benefits intended to counteract inflation, will be announced by the Social Security Administration in less than two weeks. The most recent projections place the COLA forecast at roughly 2.5%, but we won’t know for sure until the announcement on October 10.
Social Security COLA Increase 2025
A 2.5% boost would be less than the 3.2% increase that was granted in 2024, but it is still within the historical norm, which has been 2.6% on average over the previous 20 years. In 2010, 2011, 2016, and 2023, the COLA was as low as 0.0% and as high as 8.7%.
The Social Security Administration uses the third quarter’s inflation data, which runs from July to September, to determine its annual COLA. The government draws the average inflation rate during that period from what’s known as the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which analyzes spending by working Americans. The COLA is increased by the difference if that rate of inflation is higher than it was during the same time last year.
Impact on beneficiaries and payment
Millions of Americans may really be impacted by the projected increase in COLA, even though the precise proportion for 2025 has not yet been verified. For instance, a retiree who now receives a $1,500 monthly benefit would earn an additional $37.50 per month from a projected 2.5% increase, for a total benefit of $1,537.50.
It is noteworthy that there will be modifications to the Social Security SSI payment schedule in 2025. The actual date of the first SSI payment of the year, which normally occurs on January 1st, is December 31, 2024. The expected 2025 COLA rise will already be included in this early payment, giving beneficiaries a cash benefit as the new year gets underway.
What is the Social Security COLA?
Social Security recipients typically receive an annual cost-of-living adjustment with their January check to keep up with the effects of inflation. The Department of Labor’s Bureau of Labor Statistics determines the adjustment, which is based on the average change in prices over time for consumer goods and services. Every year during the third quarter, the COLA is determined by the Social Security Administration.
