The latest estimate for the Social Security cost-of-living adjustment, or COLA, that will be reflected on beneficiaries' 2025 payments, is about 2.6%.
To be sure, this is likely to be close to the actual COLA, but it is important to realize that this is an estimate. We won't know what the actual raise will be for a few months, but in the meantime, there are some very important dates to pay attention to.
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The 3 most important dates for the Social Security COLA
I won't keep you in suspense. The three critically important dates for the 2025 Social Security COLA are:
- Aug. 14
- Sept. 11
- Oct. 10
These are the three days when the Bureau of Labor Statistics (BLS) releases the previous month's consumer price index, or CPI, data. For example, on Sept. 11, the BLS will release August's CPI inflation data. Precisely, these releases happen at 8:30 am ET on these dates.
Of course, Aug. 14 has already happened. And we learned that the CPI increased by 3% compared with the year-ago level. But the other two releases, combined with this one, have major implications for the Social Security COLA.
Why these three CPI releases are so important
It's a common misconception that the Social Security COLA depends on full-year inflation, but that isn't the case. The COLA is only based on inflation data from the third quarter of each year.
So, the Social Security Administration looks at CPI data (specifically the CPI-W) from July, August, and September of each year, and compares it to the same three-month period from the prior year.
You can see the monthly CPI-W index on this SSA page, and let's look at an example of how this works. From that page, we can see that the CPI-W index level was as follows:
|
Month |
2022 |
2023 |
|---|---|---|
|
July |
292.219 |
299.899 |
|
August |
291.629 |
301.551 |
|
September |
291.854 |
302.257 |
|
3-Month Average |
291.901 |
301.256 |
Data source: Social Security Administration/BLS.
Dividing the 2023 average by the 2022 average shows a gain of about 3.2%, which is where the latest COLA came from.
When will we find out the actual 2025 Social Security COLA?
The key takeaway is that no COLA number you read will be an official one until all three of the third quarter inflation figures are revealed. Once the September CPI data is released on Oct. 10, the three figures will be averaged together and compared with the same three months of 2023 to see how much inflation there has been.
The good news is that the Social Security COLA will be announced soon after the Oct. 10 report. It is likely to be in the ballpark of the current 2.6% projection, but seniors will know exactly how much of a raise they'll be getting at that time. We'll also get some other official Social Security changes, such as the maximum amount of earnings that are taxable for Social Security, as well as the new "earnings test" limits, at that time.
Social Security recipients who are concerned about the next cost-of-living adjustment should pay close attention to the CPI figures released on the dates mentioned earlier. And expect an official announcement in mid-October.
