Social Security Announces 2025 Cost-of-Living Adjustment

The Social Security Administration is set to reveal the 2025 cost-of-living adjustment (COLA) for its approximately 70 million beneficiaries. This adjustment, which reflects changes in inflation, will be announced soon, with the announcement expected shortly after the Labor Department‘s release of the September inflation report.

The upcoming inflation report, the Consumer Price Index (CPI) for September, is scheduled for release on Thursday, October 10. Based on current forecasts by the Senior Citizens League (TSCL), an advocacy group for older Americans, the 2025 COLA is expected to be approximately 2.5%. This projection would mark the smallest increase since 2021, when the COLA was raised by 1.3% due to low pandemic-related inflation.

Significant inflation increases in 2022 and 2023 resulted in larger-than-usual cost-of-living adjustments, set at 5.9% and 8.7%, respectively. For the current year, beneficiaries saw a 3.2% adjustment. As for 2024, the average Social Security check for retirees is projected to be $1,907. Should the predicted 2.5% COLA for 2025 be confirmed, the average monthly benefit would grow by roughly $48, reaching a total of $1,955.

In a related development, Congress recently passed the Veterans’ Compensation Cost-of-Living Adjustment Act of 2024. This new legislation aligns veterans’ benefits with the Social Security COLA, mandating similar inflation-adjusted increases in veterans’ disability benefits, clothing allowances, and dependency compensation. “Boosting our veterans’ hard-earned benefits to keep pace with the cost of living is a necessary cost of war,” stated Senator Jon Tester, a Democratic co-sponsor of the bill from Montana.

The method for determining the COLA utilizes the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures spending among working Americans. The administration bases its calculations on the average inflation rate from the third quarter, spanning July through September. As inflation has cooled significantly from its 40-year high of 9.1% in June 2022, the 2025 COLA is anticipated to be lower compared to recent adjustments.

The Social Security Administration plans to issue official notifications to beneficiaries about their 2025 payments by mail in December, with preliminary information available online from mid-November.