There are still 3 weeks until the 2025 Social Security COLA is announced, but this is what we know so far
If you’re a retiree and rely on Social Security for a large portion of your retirement income, you may want to know how much your benefits will increase in 2025. Unfortunately, the Social Security Administration (SSA) isn’t ready to announce an official cost-of-living adjustment (COLA) for 2025. The reason? It’s missing key data.
Social Security COLAs are calculated based on year-to-year changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) in the third quarter of the year. Since we are not finished with September yet, the only CPI-W values available so far are those from July and August. Without a September value, no official COLA can be released.
However, there are Is There is already some information available about the Social Security COLA for 2025 and you can use it as a starting point for financial preparation for the new year.
This is what the Social Security COLA could look like in 2025
Based on inflation data available so far, the nonpartisan Senior Citizens League estimates that Social Security’s COLA will be 2.5% next year. That’s a significantly smaller increase than the 3.2% COLA that Social Security retirees received in early 2024. But that number could still move up or down depending on how inflation plays out in September.
However, the general consensus is that inflation is not expected to rise this month, so if Social Security’s COLA is expected to be above 2.5% in 2025, it probably won’t. much higher. There is also a possibility that it will fall below the 2.5% mark if inflation falls even more in September than in August.
When considering the Social Security COLA in 2025, the cost of Medicare Part B must also be considered. The SSA can set a COLA independent of Medicare. But retirees who are enrolled in both Medicare and Social Security will have their Part B premiums automatically deducted from their monthly benefits. A large increase in Part B could significantly reduce next year’s COLA — even if it doesn’t change the amount of the COLA in 2025.
If you think that a Social Security COLA of 2.5% or a raise of that magnitude will leave you short of money to cover your basic expenses in 2025, you may want to think about entering the gig economy or taking a part-time job sooner rather than later.
You will find out more in October
The September CPI-W reading is scheduled to be released on October 10. Once that happens, the SSA should be able to announce a number of important changes to the 2025 program, including not only an official COLA, but also a new earnings test limit and wage cap.
You can check the news section of the SSA website on October 10 to see how much your Social Security check will be in the new year. But keep in mind that you may have to wait for an official announcement about Medicare Part B before you can calculate how much extra money you’ll actually receive each month.
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There are still 3 weeks until the 2025 Social Security COLA is announced, but here’s what we know so far was originally published by The Motley Fool
