Social Security COLA Increase in 2025: Latest Expert Predictions Are in

Social Security beneficiaries have their eyes set on mid-October for the annual cost-of-living adjustment. That’s when the Social Security Administration typically announces the adjustment, which determines how much more money people receiving benefits will get in their monthly checks for the following year.

The COLA, billed as a percentage increase, will affect everyone receiving benefits, but not just standard retirement payments. Survivors’ benefits, Social Security Disability Insurance and Supplemental Security Income will also get a boost in January.

The SSA is making this adjustment to counter the effects of inflation. The COLA for 2024 is currently 3.2%, but experts who closely monitor inflation trends predict a lower increase for 2025.

For more information, don’t miss the four actions that could cost you your Social Security benefits and how to apply for Social Security Disability Insurance.

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.

When will the SSA officially announce the 2025 COLA increase?

The Social Security Administration typically announces the COLA increase for the following year in mid-October. The new rate goes into effect in January of the new year.

We expect the SSA to announce the 2025 COLA increase on October 10, 2024.

What Experts Predict the 2025 COLA Will Be

The Senior Citizens Associationan independent advocacy group for seniors, has predicted a lower COLA for 2025 compared to 3.2% in 2024The latest predictions from the League point to a COLA of 2.5%, which is slightly lower than the August forecast of 2.57%.

If the 2025 COLA is 2.5%, that would equate to a $48 increase in the monthly benefit, bringing the average monthly total to $1,968. The League also points out that while the latest forecast is lower than in recent years, 2.5% is still within the 20-year historical average of 2.6%.

While a 2.5% increase is likely lower than beneficiaries would like, there’s more to it than meets the eye. A lower COLA is a sign of falling inflation, which could translate into lower prices for some of your daily necessities.

It’s also important to keep in mind that the $48 increase is for the average monthly benefit, and your exact financial increase depends on a few factors. For example, for retirement benefits, if you wait until you’re 70 to sign up, you’ll receive a larger monthly check than if you sign up as soon as you’re eligible — at age 62.

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.

Note: The Social Security Administration typically announces the adjustment in the second week of October. The new rate goes into effect in January of the following year.

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.