Social Security’s 2025 COLA is announced in less than a week. Here’s why the news will be good and bad.

There’s a reason Social Security benefits are eligible for an automatic cost-of-living adjustment (COLA) each year. Many seniors get most of their income from Social Security. Without COLA, the people in that boat would be guaranteed to lose their purchasing power over time due to inflation.

If you’ve been scouring the internet trying to get information on next year’s Social Security COLA, the good news is that your wait may end this week. On October 10th, the Social Security Administration will finally be able to make an official COLA announcement.

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The Social Security COLA is based on third quarter inflation data. And by October 10, inflation data for September should become available, making this calculation possible.

But while we’re still days away from the big announcement, enough inflation data is already available to make an educated guess about the Social Security COLA in 2025. And it looks like next year’s increase will be less than the 3 .2% that COLA seniors earned at the beginning of 2024.

But a lower Social Security COLA isn’t necessarily a terrible thing. And it’s important to recognize this so you’re not thrown for a loop when an official number is released.

It really is a mixed bag

It’s easy to see why a lower Social Security COLA might seem like a bad thing — especially if that number ends up roughly in line with recent estimates calling for a 2.5 percent increase in 2025. That’s considerably less than the most recent social value of seniors. COLA security. And in general, it’s natural to assume that more money in your pocket is better than less money.

But it’s also important to recognize that because the Social Security COLA is based on inflation, a decrease in one means there’s also a decrease in the other. In other words, a less generous increase in your Social Security checks in 2025 means you might also pay less for things like gas, groceries and other essentials because of cooling inflation.

In other words, when it comes to your personal purchasing power, things may improve in 2025, leaving you no better or worse off than you were in 2024.

There are ways you can change your financial picture for the better

If you’re in a position where you’re relying on your next Social Security COLA to improve your finances, then here’s a reality check — it probably won’t happen. But this is not a 2025 COLA-specific situation.

Seniors generally don’t come out ahead financially once COLAs go into effect, because even in times when they’re more generous, those bigger increases come at a time when inflation is more prevalent.

If you really want to improve your financial picture in retirement, think about ways you can reduce your expenses and increase your income outside of Social Security. That could mean downsizing to a smaller home or exploring different areas where the cost of living is cheaper overall.

You may also have some options to generate income so you’re less dependent on your monthly Social Security checks. You could join the gig economy and work a few hours a week. Or, you can see if it’s possible to rent out part of your home for a steady income. If you have a finished basement that you mostly don’t use, taking on a tenant may be more than feasible.

And if you’re not yet retired, do everything you can to save so you have a nest egg to tap into on top of Social Security. That way, you may be less concerned about annual COLAs once your senior years arrive.

At this point, it’s just a short wait for an official Social Security COLA announcement for 2025. But be realistic about that increase, no matter what it means. And don’t rely on it to improve your financial situation. Instead, take steps on your own to get to that place so you can better enjoy retirement in the years to come.