Social Security Updates Number for Next Increase in Retiree Checks

Social Security payments are anticipated to increase in the coming year, although the exact percentage will not be officially confirmed until this fall. The monthly benefits have historically included a cost-of-living adjustment (COLA), which was first implemented by lawmakers in 1975.

The primary purpose of the COLA is to prevent the gradual erosion of purchasing power by adjusting payments in line with inflation. However, the annual increase is not fixed; it fluctuates depending on economic conditions. For instance, Social Security benefits saw a 3.2 percent increase in 2024, while the adjustment was 5.9 percent in 2021.

In 2023, due to high inflation following the country’s recovery from the coronavirus pandemic, beneficiaries received a historic 8.7 percent increase. There have also been years, such as 2009, 2010, and 2015, where no annual increase was granted.

What We Know About the 2025 Social Security COLA Increase

The next cost-of-living adjustment (COLA) is expected to be announced in October 2024, although the exact date has not been confirmed. Historically, the rates for 2022 and 2023 were released on October 12, which might suggest a similar timeline this year.

The COLA is calculated using data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures changes in the price of approximately 80,000 different goods and services. The Bureau of Labor Statistics surveys Americans about their spending patterns each quarter, which is then used to compute the COLA.

The calculation for the COLA is based on the average CPI-W for the third quarter of the current year compared to the same period in the previous year. If an increase is warranted, the new COLA is calculated by rounding the percentage to the nearest one-tenth of one percent.

It’s important to note that a cost-of-living adjustment is not guaranteed every year; for example, there was no COLA increase in 2016 due to a lack of inflation in 2015.

Who Will Receive the 2025 COLA Increase?

According to the Social Security Administration (SSA) guidelines, all Social Security beneficiaries, including those receiving retirement, survivor, disability, and Supplemental Security Income (SSI) benefits, are eligible to receive the annual COLA boost.

The following programs are covered by this adjustment:

• Retirement benefits: Includes Social Security benefits for spouses who qualify based on their partner’s income.
• Survivor benefits
• Supplemental Security Income (SSI)
• Social Security Disability Insurance (SSDI)

Retired workers can expect their payments to increase starting in December, with disability checks for recipients seeing an increase beginning in January 2025.

How Much Will Beneficiaries Receive With a 2.63% COLA Increase?

If the projected 2.63% COLA increase is approved in October, beneficiaries will see an increase in their Social Security checks starting in January 2025.

The table below provides an estimate of how much beneficiaries could receive with the potential COLA adjustment:

Retirement Benefits	Current Social Security Checks	Social Security Checks with 2.63% COLA
On average	$1,900	$1,950
Age 62	$2,710	$2,781
Age 67	$3,822	$3,923
Age 70	$4,873	$5,001

If the COLA falls between 2.6% and 2.9%, it will represent the smallest increase since the 1.3% adjustment in 2021. This indicates a slowdown in inflation and a reduction in price increases compared to previous years. However, it also means that benefit recipients will receive a smaller increase than in 2022 and 2023.

Conclusion

The Social Security COLA for 2025 is expected to be announced in October, and while the projected increase of 2.63% will provide a modest boost to benefits, it is significantly lower than the increases seen in recent years.

This lower adjustment reflects the slowing inflation, which while beneficial in terms of reduced price increases, also results in a smaller bump in benefits. Beneficiaries should stay informed about the official announcement to plan their finances accordingly.

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