How is the Social Security COLA 2025 calculated?
On 10 October, the increase to the Social Security COLA will be revealed. What is it, how is it calculated and what does it mean for your benefits?
Social Security beneficiaries are about to see an increase in their monthly payments thanks to the Cost-of-Living Adjustment, also known as COLA.
Year after year, the Social Security Administration (SSA) makes an increase in monthly payments to all beneficiaries through the COLA. The increase is made with the objective of matching the amount of the checks with the current inflation, in such a way that the beneficiaries do not lose purchasing power in their monthly payments when the rate inflation is high.
How is COLA calculated?
The increase to the COLA is made based on the annual increase in the Consumer Price Index for Salaried Workers in Urban Areas and Administrative Workers (CPI-W).
To determine this, SSA compares the CPI-W for the third quarter of the year - July, August and September - that is prior to the CPI-W for the third quarter of the current year. The difference between one and the other will be the equivalent of the increase in COLA. In 2024, the increase was 3.4%, which was much smaller than the 8.7 percent increase offered the year before.
This is what Social Security payments will likely be in 2024
Taking into account that the increase to the COLA considers the CPI-W of the third quarter of the previous year compared to the current year, the announcement will be made in the month of October when the Bureau of Labor Statistics releases its inflation data.
According to official information from the SSA, the increase for 2025 will be revealed Thursday, October 10. However, a projection made by The Senior Citizens League, one of the largest nonpartisan senior groups in the United States, notes that the increase will likley come in around 2.5 percent. If so, the payments for next year would be as follows:
Retired workers on Social Security: From $1,920.48 to $1968.48
Disabled workers receiving Social Security Disability Insurance: $1,539.92 to $1578.40
Supplemental Security Beneficiaries: $ 698.51 to $715.97
Once the increase is officially announced, beneficiaries will be able to see the increase reflected in their payments starting in January 2025.
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