Social Security 2025 COLA: Projected 2.5% Increase

More than 71 million Social Security beneficiaries can expect a 2.5% cost of living adjustment (COLA) increase in 2025, based on the Q3 inflation data so far.

In other words, the COLA will raise the average benefit by $48 to $1,968 a month. This is a welcomed increase for some, given inflation during the past year, but it is a drop off from bumps in recent years.

The Social Security Administration is scheduled to announce the official 2025 benefits increase on October 10. But don’t expect the final number to change much, if at all, at this point.

The adjustment is based on the average annual increase in the consumer price index (CPI) for urban wage earners and clerical workers (CPI-W) from July through September. Through August, CPI-W rose 2.4% in the past 12 months, compared to a 2.5% increase in CPI.

Over the years, we've learned that almost every retiree (91%) says that Social Security is a source of their retirement income. Almost two-thirds (62%) say it’s a major source.

When creating customized retirement strategies, we make certain assumptions about income and expenses. For those of you currently receiving benefits, If you think this year’s COLA will make your budget a bit more challenging, please let us know as soon as possible. Sometimes, a slight adjustment can be all it takes to make you feel more comfortable as we head into 2025.

Regards,

Michelle & Ken

The outlook for the Social Security cost of living adjustment is a forecast, and forecasts or forward-looking statements are based on assumptions, subject to revision without notice, and may not materialize.

CNBC.com, September 11, 2024. “Social Security cost-of-living increase for 2025 could be 2.5% — the lowest since 2021, estimate finds”

TheHill.com, September 11, 2024. “The estimated Social Security increase for 2025 keeps dropping”

EBRI, Retirement Confidence Survey, 2024.