If you currently have benefits, the events of September will have a big impact on your monthly Social Security checks by 2025. Millions of older Americans count on a Social Security benefit month after month, and for many, this income is essential to cover their basic expenses.
The good news is that every year, Social Security benefits are eligible for a cost-of-living adjustment that is directly tied to inflation. And if you’re someone who relies heavily on your monthly Social Security benefits, you’re probably very anxious about what cost of living adjustment (COLA) you’ll be eligible for in 2025.
The cost of living information for 2025 is not yet known with certainty
The data for the month of September is the last missing piece of the puzzle. Annual Social Security cost-of-living adjustments are calculated based on inflation data for the month of July, August and September, especially the consumer price index for urban wage earners and administrative employees (CPI-W). . If there is any increase in the CPI-W in the third quarter of the year from one year to the next, Social Security benefits increase. If there is no increase in the CPI-W, the benefits remain exactly the same.
The CPI-W data for August is not yet known. The Bureau of Labor Statistics takes a few days to publish a reading of the CPI-W, so the only official one we have is the one for the month of July. But we’re going to need the figure for the month of September to determine how much the Social Security cost-of-living adjustment for next year 2025 really amounts to. And the way inflation trends look over the next 30 days is going to play an extremely important role in determining next year’s COLA increase.
What the Social Security cost-of-living adjustment looks like so far in 2025.
The Social Security Administration will not be able to announce a cost-of-living adjustment for the year 2025 until October. But based on preliminary data, the nonpartisan Senior Citizens League estimates that Social Security recipients will receive a 2.57% increase by 2025. That’s vastly less than the cost-of-living adjustment. of the 3.2% that Social Security beneficiaries received at the beginning of 2024. However, that 2.57% estimate is not something that is already defined and, if inflation increases in September, next year’s cost of living adjustment could grow.
However, to be clear, economists do not expect a significant increase in inflation this past month. In any case, there is a chance that the Federal Reserve will finally move forward with its first interest rate cut of 2024 due to a cooldown. And it would not be surprising if the final figure for the cost of living adjustment for 2025 is lower than the current projection of 2.57%.
However, that’s not a terrible thing. While it’s normal for seniors who receive Social Security benefits to want their benefits to increase as much as possible, a lower cost-of-living adjustment is an indication that inflation is slowly slowing. And that could mean big financial relief for retirees on tight budgets. It is also worth emphasizing that the rate of inflation in recent months is already well below the 3.2% COLA that Social Security beneficiaries received at the beginning of 2024. Therefore, if you are someone who manages those well benefits, you may be able to save a small part of them in the following months.
