Here’s how Social Security’s projected cost-of-living adjustment (COLA) in 2025 might compare to the past 20 years

We are less than two weeks away from the 2025 cost of living adjustment (COLA) announcement. The government will have the last piece of data it needs to do the calculation on October 10, 2024. Once we know the COLA percentage, retirees will be able to estimate how much they will receive from the program next year.

While it’s almost certain that checks will get a boost, those hoping for a big COLA like those in 2022 and 2023 will be disappointed. Here’s what beneficiaries can expect and how it compares to the 20-year COLA average.

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COLA 2025 will be nothing to talk about at home

The latest projections from The Senior Citizens League (TSCL) indicate that the 2025 Social Security COLA will likely be around 2.5%. This rate reflects the cooling of inflation. That’s much lower than COLAs in recent years. In 2024, seniors received a COLA of 3.2%, and in 2022 and 2023, the COLAs were 5.9% and 8.7%, respectively.

While a 2.5% increase is relatively disappointing, it’s actually not that unusual. The 20-year average is only 2.6%. And there have been several years in the past two decades when beneficiaries received no COLA at all.

That said, a 2.5% COLA probably won’t be appropriate for all retirees. It will add just $48 to the average monthly check of $1,920 as of August 2024. Many seniors have likely seen their monthly expenses increase by more than that amount in the past year.

TSCL reported that Social Security has actually lost 20% of its purchasing power since 2010 as a result of COLA not keeping pace with the rising cost of living for seniors. Unfortunately, only the federal government can change the COLA calculation. So, for now, beneficiaries will have to do the best they can with what they get.

What to do after the government announces COLA 2025

Although experts expect the 2025 COLA to be close to 2.5%, it could be slightly higher or lower depending on September inflation data. Once the government announces it, you can estimate what your checks will be next year.

Add the COLA percentage to your existing paychecks to get a decent approximation of what you’ll get in 2025. This might be off by a dollar or two, but it should be pretty close. The Social Security Administration will send you a personalized COLA notice in December with your exact 2025 benefit amount.

After calculating your 2025 checks, see how that compares to your average monthly expenses. You’ll have to find a way to cover the difference yourself. Ideally, you’ll have enough personal savings to pull through. If not, you may need to explore other options, such as taking on a part-time job, cutting back on expenses, or seeking other types of government assistance for your essential expenses.

It’s best to prepare for any changes you need to make before the new year arrives so you’re not caught off guard once your new checks arrive. If you have questions about your new benefit amount after you received your personalized COLA notice in December, contact the Social Security Administration for assistance.