What the New Social Security COLA Increase Means for You

The Social Security Administration officially announced the 2025 COLA increase in early October, and that could have a massive effect on the amount of benefits you receive next year. We've got the answers in terms of what it is and what it means for you. 

The administration said the 72.5 million recipients of Social Security benefits will see a 2.5% cost-of-living adjustment in their checks for 2025, starting in January. The annual adjustment will bring an increase in monthly beneficiary payments for those receiving Social Security benefits, including retirement, survivors, Social Security Disability Insurance and Supplement Security Income. 

The administration uses COLA to adjust each year's benefits for Social Security beneficiaries. The 2.5% increase in 2025 is smaller than 2024's 3.2% boost and 2023's 8.7% jump and is an indication that inflation is cooling.

Beneficiaries should receive a new COLA notice in December this year with details of the adjustment. If you've signed up for a My Social Security account, you'll find the notice in the Message Center when you log in. 

Below, we'll detail the specifics of the 2025 COLA increase and what it means for you. 

For more, here's our essential Social Security cheat sheet, and don't miss the Social Security payment schedule and how to apply for Social Security Disability Insurance. 

What is the Social Security COLA?

The Social Security Administration determines COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers, which is a measure of the average change in prices for consumer goods and services, released monthly by the Bureau of Labor Statistics. The administration uses COLA to adjust each year's benefits that are paid to Social Security beneficiaries and Supplemental Security Income recipients.

Announced in October, the COLA goes into effect in January of the following year. 

Which government benefits make adjustments using COLA?

Social Security isn't the only government benefit that is affected by the COLA. Social Security Disability Insurance, Supplemental Security Income, Medicare and Supplemental Nutrition Assistance Program (including food stamps and other programs) all use COLA to account for inflation when setting benefits. 

A 2.5% COLA was predicted, but experts are unimpressed

We've been following expert predictions in the lead-up to the official COLA announcement, and those predictions were spot on. The Senior Citizens League, a nonpartisan advocacy group for older adults, had predicted a COLA Increase of 2.5% last month, and that's exactly where the official COLA landed. 

The Senior Citizens League has been predicting a COLA of 2.5% to 2.7% since the beginning of the year and points out that seniors are disappointed that the CPI-W fails to measure inflation as they experience it. The league said in a recent survey of 3,000 older Americans, 72% reported that changing the COLA calculation to an index that better reflects seniors' changing costs should be a top priority for Congress. 

"Our research shows that 67% of seniors depend on Social Security for more than half their income and that 62 percent worry their retirement income won't even cover essentials like groceries and medical bills." TSCL Executive Director Shannon Benton said in a statement regarding the latest COLA announcement. 

Several factors can affect the amount of money you get in your monthly check, but the 2.5% increase will go to the 72.5 million Americans receiving Social Security and Supplemental Security Income. A COLA increase of 2.5% will raise the average monthly benefit by about $48 a month. The 2025 COLA is lower than 2024's 3.2%, and much lower than 2023's 8.70% increase. 

For more, find out what to do if you never received your Social Security check and how to determine your Social Security benefits with this free tool.