In 2024, Social Security beneficiaries can expect a significant change as the cost-of-living adjustment (COLA) for 2025 is to be announced in October. Millions of Americans who rely on Social Security eagerly anticipate this adjustment to counter inflation and ensure that benefits maintain their purchasing power.
What Is COLA?
The COLA is an annual adjustment made to Social Security and Supplemental Security Income (SSI) benefits to ensure they keep up with inflation. The Social Security Administration (SSA) calculates the COLA based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a measure of price changes for goods and services.
The Bureau of Labor Statistics of the U.S. Department of Labor calculates the COLA. It involves comparing the average CPI-W from the current year’s third quarter (July, August, and September) to the same period in the previous year. The percentage change in the CPI-W determines the COLA for the following year. This method ensures that benefits reflect the increased cost of living due to inflation.
2025 COLA projections
As of recent estimates, The Senior Citizens League (TSCL), a group that fights for the rights of seniors, predicts a 2.63% increase in Social Security payments for 2025. This is a slight decrease from earlier projections, which estimated a 2.57% increase in June 2024. This is according to the TSCL statistician, Alex Moore. While the percentage might seem modest, it plays a crucial role in maintaining the value of Social Security benefits amidst changing economic conditions.
Why a lower COLA might be beneficial
Interestingly, a lower COLA could have positive implications for Social Security beneficiaries. Higher COLAs typically indicate higher inflation, which can erode the actual value of benefits over time. Lower and more stable inflation helps preserve the purchasing power of Social Security checks. Historical data supports this, showing that since 2010, periods with COLAs below 3% have corresponded with improved purchasing power for Social Security recipients.
When will the 2025 COLA be announced?
The final COLA for 2025 will be announced in October 2024. This announcement will be based on the average inflation rate during the third quarter of 2024. Until the official announcement, any projections remain speculative. Beneficiaries should prepare for the adjustment but wait for the SSA’s official release before making any financial decisions based on the expected COLA increase.
Based on the predictions, how much money will beneficiaries earn?
Although the official increase will be announced in October, beneficiaries should know that if the 2.6% takes effect, their Social Security checks will increase as follows.
| Retirement benefits | Social Security Checks | Including 2.63% of the 2025 COLA |
| On average | $1,900 | $1,950 |
| Age 62 | $2,710 | $2,781 |
| Age 67 | $3,822 | $3,923 |
| Age 70 | $4,873 | $5,001 |
| Disability benefits | Social Security Checks | Including 2.63% of the 2025 COLA |
| On average | $1,537 | $1,577 |
| Blind recipients | $2,590 | $2,658 |
| Maximum payment | $3,822 | $3,923 |
| SSI benefits | Social Security Checks | Including 2.63% of the 2025 COLA |
| On average | $698 | $716 |
| Individuals | $943 | $968 |
| Couples | $1,415 | $1,452 |
| Essential person | $472 | $484 |
