All we know so far about the 2025 Social Security COLA

In mid-October, the Social Security Adminstration (SSA) will announce the 2025 COLA based on the July, August, and September numbers of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W is published by the Bureau of Labor Statistics and differs from the CPI for All Urban Consumers (CPI-U), which is the more commonly used indicator to track inflation across markets for goods and services.

A push for a more specific CPI indicator

There has been an effort to create a new indicator, the CPI for the Elderly (CPI-E), that would track prices for goods and services weighted towards those more traditionally consumed by people 62 and older who often depend on Social Security benefits. Over the last two decades, organizations like the Senior Citizens League have found that the purchasing power of benefits like Social Security and Supplemental Security Income (SSI) have not kept up with inflation and that around forty percent of their purchasing power.

Democrats in the Senate and the House of Representatives have proposed legislation establishing a CPI-E. If approved, this indicator will be used to calculate the Social Security COLA that is applied to all benefits distributed by the SSA.

How much will the 2025 COLA be?

It is far too early to answer this question with any certainty. As mentioned earlier, the July, August, and Septemebr data will be used to calculate the COLA. Last year, a benefit increase of 3.2 percent was applied to benefits, which is far below the 8.7 percent boost seen in 2023 after inflation wracked both the US and the global economy.

According to the CPI-W, prices have increased by 1.5 percent since October. To exceed the COLA offered this year, prices would have to increase by an additional 1.7 percent by the end of September, or at least 0.28 percent each month. In February, the Senior Citizens League estimated that the 2025 COLA would be 1.75 percent. This forecast is likely to be updated in the coming weeks, as the BLS is slated to release the April CPI-W data next week.