At the start of each new year, the United States Government implements the Cost of Living Adjustment (COLA) to Social Security checks. This adjustment is designed to directly combat price inflation, ensuring that retired U.S. citizens can continue to pay their bills without financial strain.
The primary goal of the COLA is to maintain the purchasing power of retirees. Without this adjustment, many U.S. citizens would struggle with rising costs, potentially jeopardizing their financial stability.
Each year, this slight increase helps ensure that retirees and other beneficiaries don’t lose their financial footing due to inflation. Importantly, the COLA isn’t limited to Social Security retirement payments; it also applies to various other checks, such as Supplemental Security Income (SSI).
2025 COLA Increase: How Early Payments Will Increase Retirees’ Purchasing Power
Excitingly, for the year 2025, the Social Security Administration has announced that the initial COLA payments will be sent out ahead of schedule. This means that if you’re eligible, you can look forward to receiving your adjusted check sooner rather than later, providing a timely financial boost.
- Helps combat inflation
- Ensures retirees maintain purchasing power
- Applies to both Social Security and Supplemental Security Income
- Early payments for 2025 COLA
If you qualify, simply wait for your check to arrive and enjoy the financial relief without any hassle. The COLA is a crucial tool in protecting the economic well-being of retired citizens, making each new year a bit easier to navigate.
Understanding the First Social Security Payment of 2025
The first Social Security payment on the official 2025 schedule, including the Cost of Living Adjustment (COLA), is the January Supplemental Security Income (SSI). Typically, these benefits are disbursed on the 1st of each month. However, if the 1st falls on a holiday or weekend, the payment is moved to the preceding business day.
January 2025 Payment Schedule
In January 2025, the 1st is a holiday, which means the Supplemental Security Income payment will be advanced to December 31, 2024. This early payment will include the 2025 COLA, even though it falls in 2024.
What to Expect from Your January SSI COLA Payment
On this day, the maximum payment will not be the usual $943. Instead, it will be that amount plus the 2025 COLA. With the 2025 COLA increase of approximately 2.5%, you should add this percentage to your regular SSI check and other Social Security payments.
- Payment Date: December 31, 2024
- Includes: January 2025 COLA
- Expected Increase: Approximately 2.5%
What the COLA Increases Have Been Over the Last 7 Years in the United States
- 2019: 2.8% – This adjustment was made to reflect moderate inflation, providing beneficiaries with a modest increase in their benefits.
- 2020: 1.6% – A smaller increase compared to the previous year, aligning with lower inflation rates experienced during that period.
- 2021: 1.3% – This was one of the lowest COLA increases, reflecting minimal inflation impact on the cost of living.
- 2022: 5.9% – A significant jump from previous years, this increase was in response to rising inflation rates affecting the cost of goods and services.
- 2023: 8.7% – The highest increase in decades, this substantial adjustment was implemented to help beneficiaries cope with the sharp rise in inflation and the increased cost of living.
- 2024: 3.2% – A moderate increase reflecting a cooling inflation environment while still addressing cost-of-living concerns.
- 2025: 2.5% – This more modest increase aims to sustain purchasing power amid a lower inflation rate.
How is the COLA Calculated Each Year?
Measuring Inflation with the CPI-W:
The Social Security Administration (SSA) uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as the basis for the COLA calculation. The CPI-W is produced by the Bureau of Labor Statistics (BLS) and measures changes in the cost of a market basket of goods and services typically purchased by urban wage earners and clerical workers.
Determining the Comparison Periods:
- Current Year Average: The SSA calculates the average CPI-W for the third quarter (July, August, and September) of the current year.
- Previous Year Average: The SSA references the average CPI-W for the third quarter of the last year in which a COLA was determined. This is typically the previous year unless there was no COLA.
If the CPI-W has increased, the COLA percentage is rounded to the nearest one-tenth of one percent. This percentage increase is applied to the benefits starting in December of the current year, payable in January of the following year.
