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Social Security COLA: Projected 2025 Payments Tick up on Latest Inflation Data
By Julia Glum MONEY RESEARCH COLLECTIVE
The actual COLA for next year won’t be announced until October.
Social Security recipients are on track to get a 2.66% raise next year, according to the latest projection for the program’s annual cost-of-living adjustment (COLA).
The Senior Citizens League, a nonpartisan group that advocates for the interests, rights and benefits of older adults, increased its prediction for the 2025 COLA after the Bureau of Labor Statistics released new inflation numbers Wednesday. (Though the actual COLA won’t be announced until October, the league analyzes inflation data and puts out a monthly estimate so the roughly 68 million Americans who receive Social Security benefits have an idea of what’s coming down the pipeline.)
Social Security recipients often find themselves in the unusual position of rooting for higher inflation because it’ll mean a higher increase in their payments the following year.
Social Security COLA predictions
The COLA is based on a metric called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. In April, the CPI-W was 3.4%, leading The Senior Citizens League to revise its long-term COLA forecast to 2.66%.
This is a slight increase from the previous projection of 2.6%, which was based on the 3.5% March CPI-W reading.
It’s also the highest COLA prediction the group has released in months. January’s CPI-W of 2.9% led to a 1.75% COLA estimate; the 3.2% February CPI-W gave way to a 2.4% COLA projection.
It’s normal for these estimates to fluctuate over time because they’re influenced by the ever-changing inflation rate, which the Federal Reserve is attempting to manage through a series of interest rate hikes. And, to be clear, they’re only guesses at this point. The final COLA will be calculated by looking at the average inflation rate during the third quarter — that’s July, August, and September — and then comparing it to the year prior.
“With five months remaining until the October COLA announcement, we expect upward or downward adjustments in our monthly projections,” The Senior Citizens League wrote in a news release.
What if the 2025 COLA isn’t enough?
Last fall, the U.S. government ultimately approved a COLA of 3.2% for 2024, which shook out to an average raise of about $58 per monthly payment.
For many people, though, The Senior Citizens League said that wasn’t enough. Medicare Part B premiums and household expenses increased, too, eating into many beneficiaries’ boosted Social Security checks.
To address these issues, a handful of lawmakers in Congress recently introduced the Boosting Benefits and COLAs for Seniors Act, a proposal that would change the way COLA is calculated to better encapsulate older adults’ health care costs. But it hasn’t gained much traction yet.
“With the forecast of a 2.66% COLA for 2025, it appears seniors will continue to suffer financial insecurity as much next year as they have this year,” Shannon Benton, executive director of The Senior Citizens League, said in the release.
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Julia Glum is Money's news editor, keeping her finger on the pulse of financial trends that affect Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. A 2014 graduate of the University of Florida's journalism school, she previously covered breaking news, politics and education at Newsweek and International Business Times. Julia joined Money in 2018; during her time as a reporter, she wrote frequently about Amazon, passive income, stimulus checks and creative ways people make money online (think: Vine compilations, Cash App Friday and Facebook gift groups). As an editor, she oversees Money’s tax coverage, which includes extensive reporting on tax credits, year-to-year policy changes, tax refunds and the IRS’s ongoing efforts to modernize. For several years, Julia has assisted with Money’s annual Best Colleges rating and Best Places to Live rankings. Recently, she also led Money’s 50th anniversary celebrations, producing the Money Classic newsletter and rolling out Changemakers, a project profiling 50 innovators working to revolutionize personal finance. Julia has interviewed National Taxpayer Advocate Erin Collins, actor Danny Devito, Nobel Prize-winning economist Robert Shiller, rapper Killer Mike, real estate guru Ryan Serhant and many others. Her work has been cited or otherwise shared by the New York Times, Washington Post, Vox, theSkimm, Mashable, CNBC and POLITICO. She’s appeared on Good Morning America, CBS News, PIX11, WGN, the Mountain West News Bureau and more. Julia is based in New York City. You can find her at juliaglum.com.