Here’s how much raises Social Security recipients could receive next year:
Social Security is a lifeline for millions of seniors, especially at a time when saving has become difficult. As costs continue to rise and many retirees struggle with a cost of living crisis, these monthly checks can go a long way.
Many retirees look forward to their annual cost of living adjustment (COLA) from the Social Security Administration (SSA). Because this usually means an increase in benefits.
Although SSA won’t make a formal announcement until October, we already have a prediction of what the COLA will be in 2025 based on data so far this year. Here’s the good news and bad news about how much your raise will be.
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COLA forecast for 2025
We won’t know next year’s COLA until October, but the nonpartisan group Alliance on Older Americans is already predicting what the adjustment will be based on inflation data so far this year.
According to its latest estimates (as of mid-April), the group expects COLA to be around 2.6% in 2025.
Although it is impossible to know at this time how accurate this estimate is, the Alliance on Aging has a strong track record of accurately predicting COLA. In September 2022 and 2023, the group correctly predicted that next year’s COLA would be 8.7% and 3.2%, respectively.
Of course, the 2.6% forecast could change over the next six months. COLA projections are based on the Consumer Price Index for Urban Wage and Office Workers (CPI-W), published by the Bureau of Labor Statistics and used to track inflation data. If inflation changes significantly between now and October, the COLA forecast could change as well.
Bad news about next year’s COLA
The not-so-good news about this forecast is that it’s lower than what beneficiaries have been accustomed to over the past few years. In fact, the 2.6% COLA is the lowest since 2021.
| Year | Cola |
|---|---|
| 2021 | 1.3% |
| 2022 | 5.9% |
| 2023 | 8.7% |
| 2024 | 3.2% |
| 2025 (forecast) | 2.6% |
Source: Social Security Administration. Table by author.
As of March 2024, the average retired worker collects approximately $1,913 per month from Social Security. The 2.6% adjustment would add about $50 per month.
That extra cash certainly helps make ends meet, but not as much as some retirees are hoping for. Especially considering that nearly half of seniors said their household expenses increased by more than $185 per month in 2023, according to a survey by Senior Newspaper, Citizens League.
good news
However, there is a bright side to lower COLAs. The adjustment is based on inflation data, so a lower COLA means inflation has slowed over the past year.
Slowing inflation could signal that the cost of living crisis is finally starting to ease. While a small raise doesn’t always feel positive, lower overall costs generally make a bigger difference to retirees than a slightly larger monthly check.
It is unclear where COLA will officially land in 2025, but if advance predictions are correct, it will likely be smaller than in recent years.
