FINANCE
How much are Social Security benefits likely to go up in 2025 due to inflation?
As inflation slows, the COLA offered to Social Security beneficiaries is likely to be lower. How much could benefits increase next year?
In mid-October, the Social Security Adminstration (SSA) will announce the 2025 Cost-of-living Adjustment (COLA) that will be tacked onto benefits in January. The Social Security COLA impacts all benefit programs overseen by the SSA, including Supplemental Security Income.
The COLA is calculated using the Bureau of Labor’s (BLS) Consumer Price Index for Urban and Clerical Workers (CPI-W). The agency will compare the average from July, August, and September of this year to the average covering the same months in 2023. Based on the July 2024 data alone, the COLA offered would be 2.4 percent, but some forecasts expect the BLS to report price increases in August and September that will push the figure up. The Senior Citizens League, a senior rights advocacy organization, estimates that the COLA will reach around 2.57 percent, short of what the group says is needed to protect the purchasing power of beneficiaries.
In July, the average Social Security benefit for a retired worker was $1,919.40. With a 2.57 percent COLA applied, the payment would rise by $49.38 to $1,968.71.
READ MORE: When will the 2025 Social Security COLA be announced?
The failure of the COLA to prevent the erasure of purchasing power
The SCL recently released a report that found that since 2010, the COLAs offered by the SSA have led the average beneficiary to see twenty percent of their purchasing power erased. The group argues that the COLA is not calculated in a way that considers the unique consumption patterns of seniors and thus fails to account for these factors when determining the annual increase adequately. For retirees receiving benefits since 2010, the federal government would need to approve a $4,442 pay rise each year for benefits to make up for the purchasing power lost.
When will the COLA be announced?
The SSA will announce the change on Thursday, October 10, the day that BLS will release the September CPI figures.