Are you hoping for a higher 2025 Social Security COLA than current estimates? Here’s what should happen

Millions of Americans collect Social Security monthly. These benefits make it possible for many of them to cover their basic expenses.

Each year, Social Security benefits are eligible for an automatic cost-of-living adjustment, or COLA. The purpose of COLA is to help beneficiaries maintain their purchasing power over the years as inflation makes everyday living more expensive.

In recent years, Social Security COLAs have been generous to account for rampant inflation. In 2022, benefits increased by 5.9%. While that was a huge increase in itself, the following year, seniors on Social Security enjoyed an 8.7% COLA. Even the relatively modest 3.2% COLA in 2024 was quite large in the context of past Social Security increases.

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But at this point, it’s pretty clear that the 2025 Social Security COLA won’t be a record. It would be fair to call this a senior disappointment. And while there is still some wiggle room for the latest projection to change, a notable change for the better is unlikely.

Social Security recipients should brace for a 2.5 percent increase — roughly

Social Security COLAs are calculated based on third quarter inflation data. We currently only have that data for July and August. But based on what we know so far, the current working estimate for the 2025 Social Security COLA is 2.5%. This projection comes from the non-partisan Senior League.

Because September inflation data is not factored into this number, the actual 2025 Social Security COLA may end up being different. But it is unlikely to be very different.

If inflation picks up in September, the 2025 Social Security COLA could reach 2.6% or 2.7%. If it goes down, next year’s COLA should follow suit. But in general, at this point, it’s not a bad idea for seniors to assume that 2.5% is the working number and adjust their financial plans accordingly.

The only way Social Security recipients will end up with a much higher COLA in 2025 is if inflation takes a surprising turn in the coming weeks and starts rising out of nowhere. But that’s not what economists expect. Honestly, it’s not something anyone should want.

Rising inflation could lead to higher Social Security COLAs. But it also leads to higher prices for consumers, including retirees on fixed incomes. For this reason, a lower 2025 COLA is actually not such a terrible thing, as it is a sign that the costs of living are not rising at such a rapid rate.

Tune in on October 10th for an official announcement

The Social Security Administration is expected to announce next year’s COLA on October 10, along with other key changes to the program. So if you’re someone who collects benefits, this is a date to mark on your calendar.

Until then, it’s fair to assume that your monthly Social Security checks will increase by 2.5%. If that sounds like a raise you’ll be fighting for, you may want to think about some strategies to ease your financial stress. These might include pursuing different jobs or side hustles to put extra cash in your pocket.