The official COLA increase in social security has been announced: what this means for you

Last weekthe Social Security Administration has officially announced the COLA increase for 2025. We will explain to you what it is and what it means for your monthly benefit check next year.

The government said the 72.5 million recipients of social security benefits will see a 2.5% cost-of-living adjustment in their 2025 checks from January. The annual adjustment will lead to an increase in monthly benefits to beneficiaries for those receiving social security benefits, including pension, survivor benefits, social security benefits and supplementary security income.

The administration uses COLA to adjust annual benefits for Social Security beneficiaries. The 2.5% increase in 2025 is smaller than the 3.2% increase in 2024 and the 8.7% increase in 2023, and is an indication that inflation is cooling.

Beneficiaries should receive a new COLA notice with details of the adjustment in December this year. If you have signed up for a My Social Security account, you will find the notification in the Notification Center when you log in.

Below we explain the details of the 2025 COLA increase and what it means for you.

For more information, find our essential Social Security cheat sheet here. Don’t miss the Social Security payment schedule and how to apply for Social Security disability insurance.

What is the social security COLA?

The Social Security Administration determines COLA using the Consumer price index for urban wage earners and white-collar workerswhich is a measure of the average price change for consumer goods and services, released monthly by the Bureau of Labor Statistics. The administration uses COLA to adjust the annual benefits paid to Social Security beneficiaries and Supplemental Security Income recipients.

The COLA, announced in October, will come into effect in January of the following year.

Which government benefits make adjustments using COLA?

Social Security isn’t the only government benefit affected by COLA. Social Security Disability Insurance, Supplemental Security Income, Medicare, and the Supplemental Nutrition Assistance Program (including food stamps and other programs) all use COLA to account for inflation when setting benefits.

A COLA of 2.5% was forecast, but experts are not impressed

We monitored expert predictions leading up to the official COLA announcement, and those predictions were spot on. The Seniors Associationa non-partisan advocacy organization for older adults predicted a 2.5% COLA increase last monthand that’s exactly where the official COLA ended up.

The Senior Citizens League has been predicting a COLA of 2.5% to 2.7% since the beginning of this year and points out that seniors are disappointed that the CPI-W fails to measure inflation as they experience it. The League said in a recent survey of 3,000 older Americans that 72% reported that changing the COLA calculation to an index that better reflects the changing costs of seniors should be a top priority for Congress.

“Our research shows that 67 percent of seniors rely on Social Security for more than half of their income, and 62 percent worry that their retirement income won’t even cover essentials like groceries and medical bills.” TSCL CEO Shannon Benton said in a statement about the latest COLA announcement.

Several factors can affect the amount of money you receive each month, but the 2.5% increase goes to the 72.5 million Americans who receive Social Security and Supplemental Security income. A 2.5% COLA increase will increase the average monthly benefit by approximately $48 per month. The 2025 COLA is lower than 2024’s 3.2%, and much lower than 2023’s 8.70% increase.

For more information, learn what to do if you never received your Social Security check and how to determine your Social Security benefits with this free tool.