We’re Closer to Getting a Social Security COLA for 2025. Here’s How Much the Average Retiree Could Get

If you’re someone who gets a large portion of your retirement income from Social Security, then you may be itching to know what the 2025 cost of living adjustment, or COLA, will be. Each year, Social Security benefits are eligible for an automatic COLA. And the higher this number, the more purchasing power you will enjoy.

But as eager as you may be to learn about the 2025 Social Security COLA, you’ll have to sit tight a little longer. Social Security COLAs are determined using inflation data from the third quarter of the year. Because we’re not done with the third quarter of 2024, we don’t have a full set of data to work with yet. In fact, the Social Security Administration won’t be able to announce an official COLA until October 10th.

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But there are estimates of what your Social Security COLA could be in 2025. And it’s important to know what kind of monthly raise you might be looking at so you can plan accordingly.

Your monthly wages could increase by $48

The average Social Security retired worker now collects $1,920.48 per month. Meanwhile, the latest estimate of next year’s Social Security COLA by the nonpartisan Senior Citizens League is 2.5 percent.

If we do the math, the average retiree is looking at a $48 increase in their monthly Social Security checks. That’s an extra $576 per year, which isn’t a life-changing amount, but it’s nothing either.

Medicare Part B will be the wild card factor

You may be collecting Social Security but not yet enrolled in Medicare, either because you’re not old enough or because you have group health coverage through a job and therefore don’t need it. In that case, once an official Social Security COLA announcement comes out, you can run the numbers to see how much you’ll get based on your specific monthly benefit.

But if you’re enrolled in Medicare, you’ll need more than an official Social Security COLA announcement to see how much your monthly benefits will increase in 2025. That’s because seniors who are enrolled in both programs in at the same time they have their Medicare Part B premiums deducted from their Social Security benefits.

If the cost of Medicare Part B increases a lot in 2025, then your monthly Social Security benefit will not increase as much. So while a typical retired worker may have $48 more per month before accounting for Medicare Part Bthis increase could be reduced if the cost of Part B increases substantially.

This year, the cost of Medicare Part B increased by $9.80. A similar increase could erode the 2025 Social Security COLA for many people.

That’s why it’s important to look at the big picture when figuring out how much your monthly income is likely to grow in the new year. And if you’re not happy with the number you see, you may want to take steps to improve your financial picture.

These could include rethinking some expenses or finding ways to turn your home into a cash source, such as renting out a room or taking a discount and pocketing the proceeds from the sale. You can also turn to the gig economy for flexible work that puts extra money in your pocket. Doing so can give you some breathing room, even if the 2025 Social Security COLA increases your monthly benefits by more than $48.