The Social Security Administration will officially announce the cost-of-living adjustment (COLA) for 2025 on October 10, 2024. That may seem like an arbitrary date, but it isn’t. That’s the day the government releases the September Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) numbers.

This is the last piece of information we need to determine Social Security’s COLA. But we have the five other numbers that go into this calculation, and they already give us clues about what the COLA will be in 2025.

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How the Social Security Administration calculates the COLA for 2025

The government calculates the COLA by looking at the change in the third quarter average inflation data, as indicated by the CPI-W. This sounds more complicated than it is. Basically, it adds the numbers from July, August and September of this year, divides it by three, and then compares that average to last year’s average. The difference gives the COLA for 2025.

Of course, we already have all the figures for 2023 and know the figures from July and August of this year. They are listed below:

Data source: Social Security Administration.

This can seem confusing, but all you really need to know is that the CPI-W attempts to measure the price of a basket of common goods and services over time. Higher numbers mean you’ll have to spend more than you have in the past to buy the items.

It’s normal for CPI-W numbers to rise because inflation makes everything more expensive over time. But the speed at which these rates rise varies. In recent years, there have been sharp increases due to high inflation, leading to above-average COLAs. But now inflation is cooling off, and that will lead to lower COLAs.

This is what the Social Security COLA will look like in 2025

We can’t say for sure what the 2025 COLA will look like until we get the final data on October 10, 2024. But the Senior Citizens League’s latest forecast calls for a COLA of about 2.5%. That would increase the average monthly check of $1,920 by about $48 starting in August 2024.

That’s probably less than most people expected. But keep in mind that some people may have greater benefits if their checks are larger than average today.

Once we know what the official COLA is, you can add it to your current benefit to get an estimate of your 2025 checks. The Social Security Administration will also send personalized COLA notices to all beneficiaries starting in early December.

The government will apply the 2025 COLA to your benefit starting in December, but since you won’t receive the checks until the month after the due date, you won’t notice a difference until you get your check in January 2025.

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