Social Security COLA Increase: What to Expect in 2025

The Social Security Administration (SSA) is set to announce the 2025 cost-of-living adjustment (COLA) for Social Security benefits on Thursday, October 10. This annual adjustment ensures that beneficiaries' purchasing power keeps pace with inflation. Here's what we know so far and what it means for Social Security recipients.

The 2025 COLA is expected to be around 2.5%, according to the Senior Citizens League (TSCL), an advocacy group for older Americans. This would be the smallest COLA since 2021, when seniors received a 1.3% adjustment due to the pandemic's low rate of inflation. In 2022 and 2023, Social Security provided unusually large COLAs of 5.9% and 8.7%, respectively, due to surging inflation.


If the SSA announces a 2.5% COLA increase for 2025, the average Social Security check for retirees, currently $1,907, would rise by about $48 a month, totaling $1,955 per payment. This increase, while modest, will help beneficiaries manage the rising cost of living.


The 2025 COLA increase will also impact VA benefits, as Congress passed a new law tying veterans' benefits to Social Security's cost-of-living increase. This means that disability payments, clothing allowances, and dependency and indemnity compensation for surviving spouses and children will increase by the same inflation adjustment percentage as Social Security payments.


The SSA sets its annual COLA based on inflation during the third quarter, using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W tracks spending by working Americans and has been the primary measure of inflation for Social Security benefits since 1975. The agency takes the average inflation rate over the third quarter, from July through September, to determine the COLA.


The 2025 COLA announcement will provide clarity on the financial situation for Social Security beneficiaries and veterans. While the expected 2.5% increase may not be substantial, it will help offset some of the rising costs of living. Beneficiaries should review their budgets and consider adjusting their spending habits to maximize their purchasing power.