If you're a retiree who gets a large chunk of your senior income from Social Security, then you may be eager to know how much your benefits will rise in 2025. Unfortunately, the Social Security Administration (SSA) is not quite ready to announce an official cost-of-living adjustment, or COLA, for 2025. The reason? It's missing a key piece of data.
Social Security COLAs are calculated based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from one year to the next during the third quarter of the year. Seeing as how we're not through with the month of September, the only CPI-W readings that are available to date are July's and August's. Without a September reading, an official COLA can't be released.
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However, there is some information available already about 2025's Social Security COLA, and you can use it as a starting point to prepare financially for the new year.
What 2025's Social Security COLA could look like
Based on the inflation data that's available so far, the nonpartisan Senior Citizens League is estimating that next year's Social Security COLA will amount to 2.5%. That's a significantly lower raise than the 3.2% COLA seniors on Social Security received at the start of 2024. However, that number could still move upward or downward, depending on how inflation trends in September.
That said, the general consensus is that inflation is not expected to surge this month. So if 2025's Social Security COLA ends up coming in higher than 2.5%, it likely won't be much higher. There's also a chance of it dropping below the 2.5% mark if inflation slows even more in September than it did in August.
There's also the cost of Medicare Part B to consider when talking about 2025's Social Security COLA. The SSA can set a COLA independently of what Medicare does. But seniors who are enrolled in Medicare and Social Security at the same time have their Part B premiums deducted automatically from their monthly benefits. A large increase in Part B could eat into next year's COLA quite a bit -- even if it won't change what 2025's COLA is per se.
If you think a 2.5% Social Security COLA, or a raise in that vicinity, will leave you short on funds to cover your basic expenses in 2025, you may want to consider joining the gig economy or picking up a part-time job sooner rather than later.
You'll learn more in October
Oct. 10 is when September's CPI-W reading is scheduled to be released. Once that happens, the SSA should be able to announce a number of key changes to the program for 2025, including not just an official COLA, but a new earnings-test limit and wage cap.
You can check the news section of the SSA's website on Oct. 10 to see what increase your Social Security check will get in the new year. But keep in mind that you may need to wait for an official Medicare Part B announcement before you can calculate how much extra money you'll actually get each month.
