Social Security COLA Increase for 2025: The Latest Expert Predictions Are In

Social Security beneficiaries have their eyes on mid-October for the annual cost-of-living adjustment. This is 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. 

Announced as a percentage increase, the COLA affects everyone receiving benefits, but not just the standard retirement payments. Survivor benefits, Social Security Disability Insurance and Supplemental Security Income will also see a boost come this January. 

The SSA makes this adjustment to combat the effects of inflation. The COLA for 2024 is currently at 3.2%, but experts closely watching inflation trends are predicting a lower increase for 2025. 

For more, 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 usually 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 make adjustments using COLA?

Social Security isn’t the only government benefit that is affected by the COLA. Social Security Disability Insurance, Supplemental Security Income, Medicare and Supplemental Nutrition Assistance Program (including food stamps and other programs all use 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 sometime in mid-October, with the new rate going into effect in January of the new year. 

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

What the experts predict the 2025 COLA will be

The Senior Citizens League, a nonpartisan advocacy group for senior citizens, have forecast a lower COLA for 2025 versus 2024’s 3.2%. The League’s latest predictions points to a COLA of 2.5%, which is slightly lower than its August prediction of 2.57%. 

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

While a 2.5% increase is likely lower than desired for beneficiaries, there’s more to the story. A lower COLA is a sign of lowering inflation, which could translate to price reduction of some of your daily essentials. 

It’s also important to keep in mind that the $48 increase is for the average monthly benefit and your exact monetary bump is dependent on a few factors. For instance, for retirement benefits, if you wait until you’re 70 years old before you apply, you’ll get a larger monthly check versus if you apply as soon as you qualify —  at 62. 

The adjustment is closely watched by seniors because 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 it’s not enough to cover inflation. According to a Senior Citizens League survey, 69% of respondents said their household costs rose faster than the COLA last year, with costs for food and housing leading the way.

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

Keep in mind that these are estimates that can change every month based on the previous month’s inflation rate, and though they tend to be somewhat in line with the official rate, they’re not always spot on. 

For more, find out why SSI recipients aren’t getting a check this month and what to do if you were overpaid on your monthly benefit check.