Social Security’s annual cost-of-living adjustments (COLAs) are critical because millions of seniors in America rely on the program to make ends meet. In theory, COLAs ensure that benefits increase in line with inflation, preventing seniors who rely largely on Social Security for their income from falling behind.

So according to the latest news, SSA will make the announcement of the 2025 increase in Social Security COLA on October 10. By then, the key missing piece of the puzzle needed to calculate that amount should be available: September’s inflation statistics. However, there is already a fair amount of information available, even if everyone will have to wait a while to find out what the Social Security COLA will be in 2025.

Announcing an increase in the Social Security COLA for 2025

Based on annual inflation rates, the Social Security Administration changes Social Security claimant benefit levels each year. Starting with the release date of the 2025 Social Security COLA increase, on October 10, the 2025 cost of living adjustment (COLA) will be unveiled, and on January 1, 2025, it will go into effect. The Senior Citizens League, the nation’s largest nonpartisan organization of seniors, has made predictions based on inflation numbers that indicate this year’s COLA will be the lowest in three years.

Based on a 2.9% decline in consumer price data, TSCL’s forecasts indicate a possible 2.5% increase in 2025. Even though the actual COLA won’t be announced until next week, if the estimate comes true, a 2.5% increase would result in a $48 increase in the average monthly benefit for retired workers, at $1,920.

Social Security COLA increase

The cost-of-living adjustment (COLA), a percentage increase in beneficiaries’ benefits intended to combat inflation, will be announced by the Social Security Administration in less than two weeks. The most recent projections put the COLA forecast at around 2.5%, but we won’t know for sure until the announcement on October 10. Based on a decline in consumer price inflation from 2.9% in July to 2.5% in August, The Senior Citizens League (TSCL) provided the projection. Here are some important details regarding next year’s increase.

It will likely be lower than the 2024 COLA

Based on preliminary estimates, a COLA of 2.5% is forecast for 2025. Although it is possible that the increase in 2025 will be exactly 2.5%, there is a good chance that the official figure will be slightly higher or lower. Either way, seniors should expect a lower COLA in 2025 than the 3.2% increase in 2024. But that’s not entirely bad. A smaller COLA generally indicates that the cost of living is not rising as quickly because Social Security benefits are indexed to inflation. Moreover, the overall good news for consumers is falling inflation.

This will be affected by changes in Medicare Part B costs

Monthly Part B premiums are drawn from benefit payments for seniors enrolled in Medicare and receiving Social Security benefits. This not only ensures these payments are made, but also simplifies seniors’ lives. However, seniors’ COLAs may suffer if Medicare Part B costs increase significantly from year to year because they receive less supplemental Social Security benefits.

Today’s average Social Security benefit is $1,920 per month. Additionally, an average monthly increase of $48 would result if Social Security’s COLA turns out to be 2.5% in 2025. However, if Medicare Part B costs $12 more per month, that increase is offset by 25%, leaving the average senior with just $36 extra per month.

Be that as it may, it is unlikely to satisfy seniors.

• After seeing the latest 2.5% COLA projection for the coming year, seniors may be hoping for a larger Social Security benefit. But even in that scenario, there’s a good chance it won’t work. Why? Seniors’ ability to keep up with inflation has long been hampered by Social Security COLAs. Last year, the nonpartisan Senior Citizens League revealed that low COLAs have caused Social Security retirees to lose 36% of their purchasing power since 2000.
• The way these COLAs are calculated is a major contributing factor to the problem and they are based on changes to the CPI-W. That said, the CPI-W is by no means an index tailored to seniors. Because many Social Security recipients do not work and many do not live in cities, this is actually an inadequate indicator of the total expenditures they incur. Future COLA increases could be accomplished by switching to a more senior-specific index.
• While lawmakers have talked about such a change, it is far from being put into practice. Although it won’t be officially announced until later in 2025, there is already a lot to know about the surge that will take place in 2025. Using this knowledge, retirees can start planning their finances for 2025 and stay out of harm’s way. of surprise on October 10.

COLA Increases Release Date to 2025

The 2025 COLA increase will be announced by SSA and the official announcement will take place on October 10. You should stay informed about the financial implications of these developments as we eagerly await the formal announcement. Knowing what to expect helps us make informed decisions, whether that means planning future expenses or adding a little extra to our monthly budget.

Juniper Leena is a lawyer and graduated in finance. She enjoys writing articles about the American economy and social security. In her spare time she enjoys playing chess. She is the head of the Fort Hunt Herald writing team, reporting to Niamh Prescott. She also completed her MBA in finance in 2018.