Table of Contents
Every year, the Social Security Administration adjusts the payment rate for beneficiaries to account for inflation, known as the COLA. And if you receive Social Security benefits, this adjustment is important because it means you’ll have more money in the bank. The announcement is made in October, and the new rate goes into effect at the beginning of the following year.
While we’re still a few weeks away from the October announcement, that hasn’t stopped experts in the field who track inflation trends from making predictions about what the 2025 COLA increase might be. And so far, predictions point to a lower increase than the 2024 one. Of course, these predictions aren’t set in stone and could continue to change until the official announcement is made.
Below are the latest expert predictions on what the 2025 COLA could be as of September 2024. For more information, don’t miss how to file for Supplemental Security Income and how to estimate how much Social Security benefits you could receive.
What is the Social Security COLA?
To keep up with the effects of inflation, Social Security recipients typically receive an annual cost-of-living adjustment with their January check. The adjustment is based on the average change over time in the prices paid for consumer goods and services and is determined by the Bureau of Labor Statistics in the Department of Labor. The Social Security Administration sets the COLA in the third quarter of each year.
Which government benefits are adjusted using COLA?
Social Security isn’t the only government benefit affected by the COLA. Social Security Disability Insurance, Supplemental Security Income, Medicare, and the Supplemental Nutrition Assistance Program (including food stamps and other programs) all use the COLA to account for inflation when setting benefits.
How high could the COLA increase be in 2025?
The COLA for 2024 is 3.2%. Looking ahead, the Senior Citizens Association — an independent advocacy group for seniors — after looking at monthly inflation trends this year, the COLA will be 2.5% for 2025This is slightly lower than August forecast of 2.57%A 2.5% COLA increase would raise the average monthly benefit to $1,968, an increase of $48.
The League points out that 2.5% is lower than last year’s 3.2%, but that the increase is not far from the historical norm. The COLA has averaged around 2.6% over the past 20 years.
The adjustment is being closely watched by seniors, as the annual COLA change is designed to help them keep up with rising costs. And while the annual COLA increase has been as high as 8.7% in recent years, some say that’s not enough to cover inflation. According to a survey by the Senior Citizens League69% of respondents said their household expenses rose faster than the COLA last year, with food and housing costs being the highest.
COLA increases year on year
| Year | Increase compared to last year |
|---|---|
| 2024 | 3.2% |
| 2023 | 8.7% |
| 2022 | 5.9% |
| 2021 | 1.3% |
| 2020 | 1.6% |
Note: The Social Security Administration typically announces the adjustment in the second week of October. The new rate goes into effect the following January.
Please note that these are estimates and can change each month based on the previous month’s inflation. While they are usually somewhat in line with the official rate, they are not always accurate.
For more information, read why SSI recipients aren’t getting benefits this month and what to do if you received too much monthly benefit.
