Each year, the Social Security Administration adjusts the payment rate for beneficiaries to account for inflation, known as the COLA. And if you're receiving Social Security benefits, this adjustment is important, as it means more money in the bank for you. The announcement takes place in October, and the new rate will begin in the beginning of the following year.
While we're still a few weeks away from the October announcement, it hasn't stopped experts in the field that follow inflation trends to make predictions for what the 2025 COLA increase could be. And so far, the predictions point to a lower increase than 2024's. Of course, these predictions aren't set in stone and could continue to change until the official announcement is upon us.
Below are the latest expert predictions for what the 2025 COLA could be as of September 2024. For more, don't miss how to apply for Supplemental Security Income and how to estimate how much in Social Security benefits you could receive.
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 benefit 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.
What could the COLA increase be in 2025?
The COLA for 2024 is 3.2%. Looking ahead, the Senior Citizens League -- a nonpartisan advocacy group for senior citizens -- after looking at this year's monthly inflation trends forecast the COLA will be 2.5% for 2025. This is slightly down from August's prediction of 2.57%. A COLA increase of 2.5% would raise the average monthly benefit payment to $1,968, an increase of $48.
The League points out that while 2.5% is lower than the 3.2% from last year, the increase isn't far from the historical norm, and the COLA has averaged around 2.6% for the last 20 years.
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.
COLA Increases Year Over Year
| Year | Increase over previous year |
|---|---|
| 2024 | 3.2% |
| 2023 | 8.7% |
| 2022 | 5.9% |
| 2021 | 1.3% |
| 2020 | 1.6% |
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.