Social Security COLA expected to fall in 2025: what you need to know
The Social Security Administration adjusts how much it will pay out to beneficiaries at the beginning of each year to account for inflation and increased costs of living. By approximately 68 million For people who currently receive a Social Security benefit, this adjustment to the amount that beneficiaries receive is receiving a lot of attention.
The cost-of-living adjustment (COLA) determines how much extra money is added to recipients’ monthly payments. The government typically announces next year’s adjustment a few months in advance in October. As the date approaches, however, experts who watch inflation trends can make fairly accurate predictions about what the 2025 COLA might be.
The latest estimate gives us a better idea of what the official rate might be when it’s announced in a few months. We’ll tell you more below. For more, check out four ways you could lose your Social Security benefits and how to estimate your Social Security benefits with this free online tool.
What is Social Security COLA?
To keep up with the effects of inflation, Social Security recipients typically receive an annual cost-of-living adjustment, or COLA, with their January checks. The adjustment is based on the average change over time in the prices paid for consumer goods and services and is determined by the Department of Labor’s Bureau of Labor Statistics. The administration sets the COLA in the third quarter of each year.
Which government benefits are adjusted using COLA?
Social Security is not the only government benefit affected by the COLA. Social Security Disability Insurance, Supplemental Security Income, Medicare, Supplemental Nutrition Assistance Program (including food stamps and other programs) all use the COLA to account for inflation when setting benefits.
How much could the COLA increase be in 2025?
COLA for 2024 is 3.2%Looking ahead, the Senior Citizens League — an independent advocacy group for seniors — after looking at monthly inflation trends this year, predicts COLA will be 2.57% for 2025. This is down from July’s forecast of 2.63%.
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 percent of respondents said their household expenses rose faster than the COLA last year, with food and housing costs increasing the most.
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, see how to apply for Supplemental Security Income and our Social Security and SSDI cheat sheet.
