The Cost-of-Living Adjustment (COLA) for 2025 will be released by the Social Security Administration (SSA) in October. It will be used to change payments starting in January. The COLA is an important change that must be made every year to reflect changes in the cost of living, mostly because of inflation.
By lessening the effects of rising prices, this change is meant to protect the buying power of wages and benefits for workers, retirees, and people on welfare.
The SSA has to figure out and apply a COLA to all of the benefit programs it is in charge of every year. These include Social Security (retirement payments) and Supplemental Security Income (SSI). This change is meant to try to make sure that benefits can keep up with inflation, which will help people keep up their standard of living even though costs are going up.
This year’s COLA was set at 3.2%, which is a big drop from last year’s adjustment of 8.7%. It was also thought to be insufficient in the first half of the year, when inflation was higher than the adjustment.
Social Security COLA predictions for 2025
Last year’s bigger change was made because of big price increases for many necessary goods. These increases were caused by things like the COVID-19 pandemic, corporations’ need to make more money, problems in supply chains, and a rise in the cost of energy around the world.
Since inflation is going down and the economy is getting back on track, the COLA for 2025 is likely to be smaller. The Senior Citizens League, a nonpartisan group that fought for the rights of seniors, changed its prediction in the middle of August, saying that the next COLA might be around 2.57 percent.
It is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that is used to figure out the COLA. By comparing the average CPI-W from the third quarter of this year (July, August, and September) to the same quarter the previous year, the SSA comes up with its number.
Based on data from July, which showed a possible rise of 2.4%, the COLA for 2025 is currently being predicted. The Senior Citizens League thinks that the CPI-W will keep going up over the next two months, which will bring the final number close to their guess of 2.57 percent.
The CPI-W is an important measure because it shows how the prices paid by salary earners and office workers in cities have changed over time for a group of goods and services. In the past few months, the CPI-W has gone up and down. In June, prices went down, but in July, they went back up and are now almost back to where they were in April.
The numbers from August will add another layer to the predictions, which will get more accurate as time goes on until the final number is released in September. This change in the CPI-W has a direct effect on the final COLA number because it shows how people who depend on these benefits are feeling about rising prices.
The official word on the 2025 rate hike will come out after the Bureau of Labor Statistics (BLS) posts its September Consumer Price Index report. The reveal is set for Thursday, October 10 this year. The September CPI data is very important because it completes the set of data for the third quarter that the SSA needs to finish its COLA estimate.
Before this, on September 11, the BLS will release the August CPI numbers. This will give analysts and forecasters the most up-to-date information they need to change their COLA forecasts.