We have 5 of the 6 data we need to calculate the 2025 Social Security Cost of Living Adjustment (COLA). Here’s what they tell us.

The Social Security Administration will officially announce the 2025 cost of living adjustment (COLA) on October 10, 2024. That may seem like an arbitrary date, but it’s not. That’s when the government releases the September figure for the Consumer Price Index for Urban Wage and Service Workers (CPI-W).

It’s the last piece of information we need to determine your Social Security COLA. But we have five other numbers that go into this calculation and already give us clues as to where the 2025 COLA will end up.

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How the Social Security Administration will calculate COLA 2025

The government calculates the COLA by looking at the change in average inflation data from the third quarter, as indicated by the CPI-W. It sounds more complicated than it is. Basically, it will take the numbers from July, August, and September of this year, total them, divide them by three, and then compare that average to last year’s average. The difference will be COLA 2025.

Obviously, we already have all the figures from 2023 and we know the figures for July and August of this year. They are listed below:

Data source: Social Security Administration.

This may sound confusing, but all you need to know is that the CPI-W tries to measure the price of a basket of common goods and services over time. Higher numbers mean you have to spend more than before to buy the items.

It’s normal for CPI-W numbers to go up because inflation makes everything more expensive over time. But the speed at which these rates rise varies. We have seen strong increases due to high inflation over the past few years, resulting in above average COLAs. But now inflation is cooling and that will lead to a lower COLA.

What the 2025 Social Security COLA will look like

We can’t say for sure what the 2025 COLA will look like until we get the final data on October 10, 2024. But the latest projection from The Senior Citizens League puts the COLA around 2.5%. That would add about $48 to the average monthly check of $1,920 as of August 2024.

It’s probably lower than what most people were hoping to hear. But keep in mind that some people may see bigger bumps in their benefit if their checks today are bigger than average.

Once we know what the official COLA is, you can add it to your current benefit to get an approximation of your 2025 checks. The Social Security Administration will also send personalized COLA notices to all beneficiaries starting in early December.

The government will apply COLA 2025 for your benefit starting from December. But since you get your checks the month after they’re due, you won’t notice any difference until you get your January 2025 check.