For the millions of Americans currently receiving Social Security benefits, the COLA (cost-of-living adjustment) isn't just about how much more they'll get from their monthly checks. It's also about whether the increase will help them to get their everyday essentials. Every year, typically in October, the Social Security Administration adjusts the monthly payment for recipients to account for inflation.
While the official COLA will be announced next month, experts following inflation trends month to month can make fairly accurate predictions for what the adjustment will look like for 2025, and the latest predictions are pointing to a lower increase than 2024's.
Below, you'll find the latest predictions from experts in September 2024, along with COLAs from the past for reference. For more, don't miss our Social Security and SSDI cheat sheet, and the changes to Medicare to expect in 2025.
What is the Social Security COLA?
To keep up with the effects of inflation, Social Security recipients usually receive an annual cost-of-living adjustment, or COLA, 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, 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?
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 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 $1968, an increase of $48.
The League points out that while 2.5% is lower than the 3.2% from last year, that the increase isn't far from the historical norm, and that 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.