The cost of living adjustment (COLA) news is a big deal for the millions of retirees who depend on Social Security checks to pay their bills and enjoy their golden years. Most seniors are worried, though, that the expected raises won’t be enough to keep up with rising prices, based on predictions made all year long.
The Social Security Administration will give its official estimate in October, but the Senior Citizens League thinks that the COLA will be 2.63% in 2025. The annual rise worries retirees, but the COLA might not be that important in the long run.
Increase in Social Security Checks by 2025 COLA Update
A cost-of-living adjustment (COLA) is a rise in pay, benefits, or earnings because of rising prices. The consumer price index (CPI) is used to figure out inflation. It’s generally based on an objective measure that gets close to how much extra money a normal person or family needs over time to keep up their standard of living.
People who live in places with higher inflation rates or who are on fixed incomes are helped by COLA increases. They are often talked about during union talks and are a key part of a successful effort to keep employees.
At the moment, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from Q3 2024 determines the COLA. The data from July, August, and September 2024 will be very important for making changes in 2025, but the changes will likely be smaller as inflation slows down.
The yearly increase in Social Security benefits and the cost of living adjustment are both controlled by inflation. This is because COLAs are higher when inflation is high and lower when inflation is low. This is why there was a big 8.7% rise in 2023, after a year of uncontrollably high inflation, but only a 3.2% rise in 2024, as inflation started to go down.
Since it was thought that inflation would keep going down, the first COLA predictions for 2025 were for an even smaller rise of 1.4%. But we haven’t seen that in a while. Prices are going up again, and so are predictions of what the 2025 COLA will be.
How will retirees’ Social Security checks increase if the 2.63% COLA becomes effective?
If the 2.63% cost of living adjustment (COLA) becomes official in October, it will determine how much Social Security checks will increase for all beneficiaries beginning in January 2025. However, keep in mind that this is only an estimate; the official percentage may increase or drop before the end of the year.
| Retirement benefits | Social Security checks | Social Security checks, including 2.63% COLA |
| On average | $1,900 | $1,950 |
| Age 62 | $2,710 | $2,781 |
| Age 67 | $3,822 | $3,923 |
| Age 70 | $4,873 | $5,001 |
Some beneficiaries will receive earlier increases in their Social Security checks than others
People who are eligible for Social Security will start getting their new checks in January 2025. These checks will include the cost of living increase (COLA). That being said, some people will get their benefits earlier because January 1 is a holiday.
Because of this, people who get Supplemental Security Income (SSI) will get their January Social Security checks on December 31. The Social Security Administration will also make some changes to the program next month, which will mean that these people will get an extra increase in their payment.
As planned, starting September 30, the SSA will no longer count food when figuring out SSI recipients’ In-Kind Support and Maintenance (ISM). This change is meant to lower the monthly payment while not changing the applicant’s ability to get the loan. This is one of a number of changes that are being made to make these benefits easier for the most needy people in the country to get and more fair.