Increase in Social Security COLA for 2025: The latest expert forecasts are available

Social Security recipients can’t wait to think about the annual cost-of-living adjustment in mid-October. That’s when the Social Security Administration typically announces the adjustment that determines how much more money benefit recipients will receive each month in the following year.

The COLA, announced as a percentage increase, will affect all beneficiaries, but not just regular pension payments. Survivor benefits, Social Security disability benefits and Social Security supplemental income will also increase in January.

The SSA is making this adjustment to counteract the effects of inflation. The COLA for 2024 is currently 3.2%, but experts who closely monitor inflation trends are forecasting a smaller increase for 2025.

Don’t miss the four actions that could cost you your Social Security benefits and learn how to file for Social Security disability.

What is the Social Security COLA?

To keep up with the effects of inflation, welfare recipients typically receive an annual cost-of-living adjustment with their January check. The adjustment is based on the average change in the prices of consumer goods and services over time and is set 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 is not the only government benefit affected by the COLA. Social Security Disability Insurance, Social Security Supplemental Income, Medicare, and the Supplemental Nutrition Assistance Program (including food stamps and other programs) also use the COLA to account for inflation when setting benefits.

When will the SSA officially announce the COLA increase for 2025?

The Social Security Administration typically announces the COLA increase for the following year sometime in mid-October, with the new rate taking effect in January of the new year.

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

How the experts predict the COLA 2025

The Senior Citizens League, a nonpartisan senior advocacy group, has forecast a lower COLA for 2025 than in 2024 (3.2%). The league’s latest projections suggest a COLA of 2.5%, slightly lower than its August forecast of 2.57%.

If the COLA is 2.5% in 2025, that would mean a $48 increase in monthly benefit payments, bringing the average total monthly payment to $1,968. The league also points out that while the latest projection is lower than in recent years, 2.5% is still within the historical average of 2.6% over the past 20 years.

A 2.5% increase is probably less than desirable for beneficiaries, but there’s more to the story. A lower COLA is a sign of falling inflation, which could lead to price reductions on some of your everyday necessities.

It’s also important to remember that the $48 increase affects the average monthly benefit, and your exact increase in money will depend on a few factors. For example, if you wait until you’re 70 to claim retirement benefits, you’ll get a larger monthly check than if you apply as soon as you qualify – at age 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 that’s not enough to cover inflation. According to a Senior Citizens League survey, 69% of respondents said their household expenses rose faster than the COLA in the last year, with food and housing costs increasing the most.

Note: The Social Security Administration typically announces the adjustment in the second week of October. The new rate takes effect the following January.

Keep in mind that these are estimates and can change each month based on the previous month’s inflation rate. While they tend to be roughly in line with the official rate, they are not always exactly right.

For more information, see Why SSI recipients won’t receive a check this month and what to do if your monthly benefit check was overpaid.