All Social Security retirees should do this on October 10

Social Security is an important part of many seniors’ retirement budgets. Six in 10 retirees said their paychecks are a major source of income in the latest edition of an annual Gallup poll.

In recent years, however, Social Security retirees have had to weather some of the highest rates of inflation we’ve seen in 40 years. Housing and healthcare prices, two areas where seniors spend a lot, have been particularly hard hit in recent years.

Social Security includes an annual cost of living adjustment (COLA) to help retirees’ monthly benefits keep up with rising prices. And the high inflation of the last three years has led to some substantial increases in benefits.

In 2024, inflation began to cool; however, prices remain high for many retirees. But cooling inflation could mean a lower COLA for Social Security retirees.

That is why October 10 is an important date. In just a few days, the Social Security Administration will announce the 2025 Social Security COLA. Here’s exactly what to do that morning and what to expect.

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Mark your calendar

Each year, the Social Security Administration calculates the next year’s COLA based on third-quarter inflation data. It uses a subset of the consumer price index known as the CPI-W, which tracks a basket of goods representative of the expenditures of urban wage earners and service workers.

The Bureau of Labor Statistics will release September’s CPI data at 8:30 a.m. ET on October 10. Shortly thereafter, SSA will publish the official 2025 COLA in the Communications Corner of its website.

The news release will detail the percentage increase in Social Security benefits in 2025. It will also likely detail the average increase in benefits in a nominal amount.

Here’s what to expect

As noted, the COLA is based on third quarter inflation levels. Fortunately, we already have data from two months into the quarter, which gives a very narrow range of likely outcomes given September’s CPI reading.

Right now, retirees should expect a 2.5% COLA for next year. There is a wide range of potential September CPI-W readings of between 2.1% and 2.4% year-over-year, which will lead to that COLA. The Senior League also put 2.5% as its best estimate for next year’s COLA after the August CPI release.

COLA 2025 will be much lower than in recent years. Seniors received raises of 5.9%, 8.7%, and 3.2% in 2022, 2023, and 2024, respectively. Even so, 2.5% is still above the average COLA of 2% received over the past 20 years.

What you can do to improve your benefits

Retirees collecting Social Security have limited options to improve their benefits if the annual COLA does not meet their needs.

If you have your own retirement savings to fall back on, you have more flexibility. You may be able to withdraw or suspend benefits and earn delayed retirement credits while living primarily off your existing savings. In exchange for giving up your monthly check today, you can get a bigger check later. But this is not a feasible option for many.

If you are still working, you may be able to increase your wages faster than inflation. This could have the added benefit of increasing your Social Security benefit in the long run, but could result in a smaller check today because of the retirement earnings test. (The SSA will also announce new earnings test limits on October 10.)

If your Social Security COLA isn’t keeping up with your expenses, you may need to consider some significant moves to reduce your expenses. That could mean moving to a lower-cost area to live in or a more tax-friendly state.

It’s only a matter of days until you can find out exactly what you’ll get from Social Security in 2025. While you may find the 2025 COLA disappointing, retirees can take comfort in the fact that a low COLA means that inflation is finally cooling down. stopped after three very hard years. In general, low and steady inflation is good for retirees’ budgets. So while a lower COLA might sting, it might work out for the best in the long run.