Here’s how much the average Social Security benefit will increase next year if the current COLA estimate is correct

To calculate an official cost of living adjustment (COLA), we need three pieces of information: July, August, and September inflation data.

We’ve had July and August data available for a while now. But since September just ended, it’s too early to have a reading of the Consumer Price Index for Urban Wage and Service Workers (CPI-W) for the month, which is the index by which COLAs are measured.

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Rather, this information is expected to be released on October 10. And once that happens, the Social Security Administration (SSA) can officially calculate a 2025 COLA.

However, there is a working estimate of next year’s Social Security COLA based on CPI-W readings for July and August. And if that number is correct, then we can use it to get a sense of how much the average Social Security wage will increase. But you’ll also have to take this calculation with a grain of salt for one big reason.

A smaller COKE is probably in store

Beginning in 2024, Social Security benefits received a COLA of 3.2%. Growth next year looks lower, however, with estimates pointing to 2.5% growth in 2025, based on inflation data for July and August.

Meanwhile, today’s average Social Security retired worker receives about $1,920 per month. If this 2.5% COLA estimate turns out to be correct, it will translate to an extra $48 per month for the average Social Security recipient in 2025. But before you get too ready to see your monthly income increase with $48, you realize there is a wild problem. card factor you will need to take into account.

Will an increase in Medicare Part B affect the Social Security COLA?

Seniors who are enrolled in Social Security and Medicare at the same time have their Part B premiums deducted from their monthly benefits. In 2024, the cost of Medicare Part B increased by $9.80 from 2023.

At this point, Medicare has not announced what the standard monthly premium will be in 2025 for Part B. But if the increase is similar, it will cut about $10 from next year’s Social Security COLA, raising the average monthly check by just $38 in instead of $48.

Furthermore, Medicare may not be able to announce an official premium for Part B until after October 10. So while you may get some helpful information from the SSA that day, you may have to wait a little longer to see how much your monthly benefit will be. will actually increase.

There is good news in all of this

You might not like the idea of ​​a Social Security COLA of just 2.5% in 2025. And you might downright hate the idea of ​​your Medicare premium costs rising to the point where the COLA is reduced .

But remember that the reason behind this 2.5% COLA — and not a bigger increase — is to cool inflation. And a slower pace of inflation could mean getting more purchasing power out of your monthly Social Security benefits — even after you factor in an increase in the cost of Medicare Part B.