Social Security Cola 2025: Everything To Know
As we approach the end of 2024, retirees and Social Security beneficiaries eagerly await the announcement of the 2025 Cost-of-Living Adjustment (COLA). This annual adjustment crucially also helps Social Security benefits keep pace with inflation. Let’s take a comprehensive look at what to expect for the 2025 COLA.
What is COLA?
The Cost-of-Living Adjustment (COLA) annually changes Social Security benefits to counteract inflation. It preserves the purchasing power of Social Security and also Supplemental Security Income (SSI) benefits against rising prices.
How is COLA Calculated?
The Social Security Administration (SSA) bases COLA on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). To calculate the COLA, the SSA compares the average CPI-W from the third quarter of the current year to the same period in the previous year.
2025 COLA Predictions
Experts predict the 2025 COLA will hover around 2.5%. This modest increase reflects cooling inflation rates, compared to the higher adjustments seen in recent years. For the average retiree receiving about $1,870 per month, this adjustment would also boost their benefits by approximately $47 per month or $564 annually.
Impact on Benefits
While a 2.5% increase might seem small, it’s important to remember that any increase helps maintain the purchasing power of benefits. However, some retirees may find it challenging to keep up with rising costs in areas like healthcare, housing, and transportation.
Key Dates to Watch
The Social Security Administration will officially announce the 2025 COLA on October 10, 2024. Beneficiaries will see this adjustment in their Social Security checks beginning in January 2025.
Why COLA Matters
COLA is vital for millions of Americans who rely on Social Security benefits. It helps ensure that their income keeps pace with inflation, also providing a financial cushion against rising living costs.
