In 2025, there is a possibility of a 2.64% increase in Social Security as estimated by The Senior Citizens League. This could bring a $50 increase in social security benefits. The official announcement regarding the 2025 COLA from the SSA is expected in October.
Social Security payments
Social Security benefits provide financial support to people when they retire or become disabled. This payment is provided by the US government as part of social insurance, to offer income to retired, disabled, or deceased workers and their dependents. The benefit amount is determined by factors such as the individual’s earnings history and the age at which they start receiving the benefits. The Social Security Administration (SSA) calculates this amount using a formula that takes into account the individual’s years of earnings. The higher someone’s lifetime earnings, the higher their social security benefit will be.
The annual amount of social security benefits is based on cost-of-living adjustment, COLA, which is set by the Social Security Administration.
How is COLA calculated?
According to the U.S. Bureau of Labor Statistics (BLS), the Cost of Living Adjustment (COLA), is determined based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which monitors spending by employed individuals in the United States.
The COLA is calculated as the percentage increase in the CPI-W from the third quarter average of the previous year to the same average from the current year. If the inflation rate exceeds the rate from the previous year during the same period, the COLA will be increased by the difference. The percentage increase is rounded to the nearest tenth of a percent and applied to monthly Social Security payments.
For 2025, the COLA will be determined by comparing the CPI-W for the third quarter, July, August, and September, of 2023 to that of the third quarter in 2024.
Latest COLA Projection
The Social Security Administration adjusts benefits annually to account for inflation through a cost-of-living adjustment (COLA). The 2025 COLA is projected to be around 3%, based on early estimates. However, the Senior Citizens League estimates it to be 2.66%, while a retired analyst from the same organization expects it to be 3.2%.
In June, consumer prices rose by 3%, the smallest increase since June 2023 and lower than the 3.1% forecasted by economists.
The official announcement of the 2025 COLA is expected in October.
How Much Will Your Payments Go Up?
The Social Security Administration (SSA) reports that the average monthly benefit as of June 2024 is $1,781.07. If a 2.63% increase is approved, the monthly payment would go up by about $50.
However, this percentage increase is not officially confirmed. Confirmation of this year’s cost-of-living adjustment (COLA) will be announced in October, and the first payments with the new COLA will be in January.
