The Social Security Administration is set to announce the 2025 cost-of-living adjustment (COLA) on October 10, 2024. While this date may seem random, it aligns with the government’s release of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for September, the final key data needed to calculate the upcoming COLA.
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How the Social Security Administration Calculates the 2025 COLA
The government determines the COLA by analyzing the change in inflation based on the average CPI-W for the third quarter (July, August, and September). Specifically, it calculates the average CPI-W for these three months, compares it to the same period from the previous year, and the difference determines the COLA for the next year.
We already have the CPI-W numbers for July and August, and while we are waiting on September’s data, these early figures suggest what we can expect for 2025.
What to Expect for the 2025 COLA
The CPI-W tracks the cost of a basket of common goods and services over time, reflecting how much more—or less—consumers need to spend. While inflation has been cooling after the sharp increases seen in recent years, this will result in a smaller COLA for 2025 compared to the previous two years of unusually high adjustments.
The Senior Citizens League has projected the 2025 COLA to be around 2.5%. This would mean about a $48 increase for the average monthly Social Security benefit of $1,920 as of August 2024. While it may be lower than some hoped, higher earners with above-average benefits could see larger increases.
When Will You See the 2025 COLA?
Once the final COLA is confirmed, you can estimate your 2025 benefit by adding the adjustment to your current payment. The Social Security Administration will also send personalized notices to all beneficiaries beginning in early December. Although the adjustment is applied in December 2024, you’ll first see the increase reflected in your January 2025 payment, as benefits are paid a month in arrears.
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