Cost-of-Living Adjustment (COLA) is an increase in income, or Social Security benefits and Supplemental Security Income (SSI), to match the current cost of living, or counteract the effects of inflation.
Just like workers get an occasional increase in pay to match current cost of living, Social Security beneficiaries receive periodic increase in benefits to help maintain their purchasing power.
How is COLA calculated?
COLA is calculated by the Social Security Administration based on annual inflation rate. It is typically equal to the percentage increase in the average prices of goods, represented by Consumer Price Index (CPI).
However, there are different variations of CPI. In respect to this, COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). To calculate the current year’s COLA, the average CPI-W for the third quarter (July through September) of the current year is compared to that of the previous year.
Because COLA amounts are dependent on CPI-W, they aren’t guaranteed to increase every year. If there is no increase in CPI-W, there can be no increase in cost of living adjustments.
COLA amount for 2025
As of today, Social Security has not announced the cost of living adjustment amount for 2025. While there are several estimates and projections about the 2025 COLA, there will be an official announcement in October, when the third quarter inflation data is available, and after the Federal Bureau of Labor Statistics publishes September’s CPI-W data.
When will you receive the 2025 COLA?
You will receive 2025 COLA in January of 2025. Adjustments will be calculated and paid to Social Security beneficiaries and Supplemental Security Income (SSI) alongside their monthly benefits.
How will you receive COLA payments for 2025?
As a Social Security beneficiary or SSI recipient, benefits amounts for January will be updated in the Message Center of your my Social Security account in December. If you do not have a my Social Security account, create one here. Ensure you select your message preferences so you can stay updated on your benefit amount.
Social Security will also send notices via mail throughout the month of December. If you do not receive yours by beginning of January, contact Social Security online, or via call at 800-772-1213 (800-325-0778, if you’re deaf or hard of hearing).
In conclusion, the amount for 2025 will officially be announced in October 2024, with payments reflecting the adjustment starting in January 2025. Create a my Social Security account if you don’t have one, to stay in the loop.
