Every October, the Social Security Administration (SSA) announces the Cost of Living Adjustment (COLA). This adjustment determines how much the monthly benefits for retirees and disabled individuals in the United States will increase. Typically, COLA rises due to inflation, though it can also decrease. For 2025, a smaller increase is expected compared to the 3.2% increase seen in 2024.
The first group to receive the new COLA in 2025 will be those enrolled in the Supplemental Security Income (SSI) program. This group gets their payments on the first day of each month. Because of the New Year’s federal holiday, these beneficiaries will receive their payments with the new COLA on December 31, 2024, which corresponds to the benefits for January 1, 2025.
Social Security Disability Insurance (SSDI) Beneficiaries
Following the SSI recipients, those who receive Social Security Disability Insurance (SSDI) will get their new COLA payments on January 3, 2025. Retirees will receive their new benefits based on their birth dates:
- Those born between the 1st and 10th of any month will receive their benefits on January 8, 2025, the second Wednesday of January.
- Those born between the 11th and 20th of any month will get their benefits on January 15, 2025, the third Wednesday of January.
- Those born between the 21st and 31st of any month will receive their benefits on January 22, 2025, the fourth Wednesday of January.
Calculation and Announcement of COLA
The COLA for 2025 will be announced on October 10, 2024, when the Bureau of Labor Statistics (BLS) releases the inflation data for September. This data is essential for the SSA to calculate the necessary adjustment.
According to the Senior Citizens League, the estimated COLA for 2025 might be 2.63%. However, this figure is provisional and could change based on the latest inflation data.
Impact of COLA on Benefits
If your average payment in 2023 was $697, with a COLA of 2.63%, your benefits would increase to $715, which is an increase of $18 per month. This translates to an additional $216 per year for those receiving Supplemental Security Income.
The Cost of Living Adjustment (COLA) is an annual modification made to ensure that retirees‘ benefits retain their purchasing power against inflation. This adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) measured by the U.S. Bureau of Labor Statistics
Each year, the SSA reviews CPI-W data to determine if living costs have increased. If inflation has risen, beneficiaries can expect an increase in their monthly payments, helping them cover the rising costs of goods and services.
For 2025, the COLA is expected to reflect changes in the costs of goods and services, taking into account recent economic fluctuations. Inflation, driven by various economic factors, directly influences the COLA percentage adjustment. Increases in the prices of basic goods, healthcare services, and housing, for example, can result in a higher adjustment.
Preparing for the New Year
As the announcement of the COLA approaches, it is important for Social Security beneficiaries to stay informed through official sources. Changes in benefits can significantly impact annual financial planning.
Beneficiaries should review their accounts and ensure that the SSA has their updated contact information to receive notifications about payment changes. Those who depend on these benefits for essential expenses should plan accordingly, adjusting their budgets to reflect the new amounts.
The announcement of the COLA for 2025 is a crucial event for millions of Social Security beneficiaries in the United States. This annual adjustment ensures that payments reflect changes in the cost of living, providing necessary financial support for retirees and disabled individuals. Staying informed about the payment schedule and details of the adjustment is essential for effective financial management and planning for the upcoming year.