We’re still 3 weeks away from a 2025 Social Security COLA announcement, but here’s what we know so far

If you’re a retiree who gets a large portion of your senior income from Social Security, then you may be anxious to know how much your benefits will increase in 2025. Unfortunately, the Social Security Administration (SSA) isn’t 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 year-over-year changes in the Consumer Price Index for Urban Wage and Service Workers (CPI-W) during the third quarter of the year. Since we haven’t finished September, the only CPI-W readings that are available so far are from July and August. Without a September reading, an official COLA cannot be released.

Image source: Getty Images.

Still, there it is some information is already available about the 2025 Social Security COLA and you can use it as a starting point to prepare yourself financially for the new year.

What the 2025 Social Security COLA could look like

Based on inflation data available to date, the nonpartisan Senior Citizens League estimates that next year’s Social Security COLA will be 2.5 percent. That’s a significantly smaller increase than the 3.2 percent Social Security COLA seniors received in early 2024. However, that number could continue to move up or down depending on inflation trends in September.

That said, the general consensus is that inflation is not expected to rise this month. So if the 2025 Social Security COLA ends up being higher than 2.5%, it probably won’t be much superior. There is also a chance that it will fall below the 2.5% mark if inflation slows further in September than in August.

There’s also the cost of Medicare Part B to consider when talking about the Social Security COLA in 2025. The SSA can set a COLA independent of what Medicare does. But seniors who are enrolled in Medicare and Social Security at the same time have their Part B premiums automatically deducted from their monthly benefits. A big increase in Part B could affect next year’s COLA quite a bit — even if it won’t change what the 2025 COLA is itself.

If you think a Social Security COLA of 2.5% or a raise close to it will leave you without the funds to cover your basic expenses in 2025, we recommend joining the gig economy or choosing a job early. part-time work. than later.

You will find out more in October

October 10 is when September’s CPI-W reading is scheduled to be released. Once that happens, SSA should be able to announce a number of key program changes for 2025, including not just a formal COLA, but a new earnings-test limit and a salary cap.

You can check the news section of the SSA website on October 10 to see what increase your Social Security check will get in the new year. But keep in mind that you may have to wait for an official Medicare Part B announcement before you can calculate how much extra money you’ll actually get each month.