The 2025 Social Security COLA: What 5 of the 6 Data Points Reveal About Next Year's Adjustment
As we approach the official announcement of the 2025 Social Security Cost-of-Living Adjustment (COLA), set for October 10, 2024, we're already getting a clear sense of what to expect. While the final figure hinges on the release of September's Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), we already have the inflation data for July and August. These numbers, combined with last year's figures, give us a strong indication of the direction COLA will take in 2025.
The way COLA is calculated may sound complicated, but it's fairly straightforward. The government looks at the CPI-W figures from the third quarter—July, August, and September—and compares the average of these months to the same period from the previous year. The percentage difference becomes the COLA, which determines how much Social Security benefits will increase to account for inflation.
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This year, July's CPI-W figure was 308.501, and August’s was 308.640. September's data is yet to be revealed, but with these two months already in hand, experts are forecasting a COLA increase of around 2.5%. This projection would mean a modest $48 monthly boost to the average $1,920 Social Security check, which is far less than the sizable increases of the last few years, when inflation was significantly higher.
While a 2.5% increase may seem underwhelming, it reflects the cooling inflation rates we've seen recently. After a few years of sharp increases in the cost of living, inflation is stabilizing, and with it, Social Security COLAs are adjusting accordingly. Beneficiaries who have higher-than-average checks will see slightly larger increases, but the 2.5% figure offers a general idea of what most recipients can expect.
Once the official COLA is announced in October, beneficiaries will receive notices in December detailing their updated benefits. The 2025 COLA will be applied in December, but the increase will be noticeable in January’s payments.
While this adjustment will help, many seniors may still feel financial strain, especially given rising costs in housing and healthcare, which continue to outpace the general inflation rate. The expected increase in Medicare Part B premiums in 2025 could further diminish the impact of the COLA for many retirees. Still, the adjustment ensures that Social Security keeps pace with inflation, even if it’s at a slower rate than previous years.
We’ll know for certain how the numbers shake out on October 10, but for now, it seems that the 2025 COLA will be modest, providing necessary but limited relief for Social Security beneficiaries.
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