Each year, Social Security recipients receive a Cost of Living Adjustment (COLA) to help them manage rising prices for goods and services. This annual increase impacts retirees, survivors, disabled individuals, and Supplemental Security Income (SSI) recipients. Although the final COLA percentage for 2025 is yet to be announced, projections from the Senior Citizens League (TSCL) suggest it will be around 2.5%. This estimation could change when the official announcement is made, but it provides a good indication of what beneficiaries might expect.
COLA
Knowing when the new COLA takes effect and knowing its impact can help beneficiaries plan better. Below are three essential dates to keep in mind.
Announcement
October 10, 2024: The Social Security Administration (SSA) will officially announce the COLA for 2025. At this time, the SSA will finalize the percentage based on the latest Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This data will include the average inflation figures from July, August, and September of 2024 compared to the third quarter of 2023.
Beneficiaries often think of the COLA as a direct increase to their Social Security checks, but that’s not quite accurate. Instead, the SSA applies this percentage to the Primary Insurance Amount (PIA)—the benefit amount you would receive at full retirement age.
Depending on when you claim your benefits, the actual dollar amount you see may vary. For instance, if you currently receive $2,000 monthly, a 2.5% COLA would increase your monthly benefit by $50, making it $2,050 in 2025.
Notices
Early December 2024: By early December, the SSA will begin sending out personalized COLA notices to all beneficiaries. These letters will specify the exact dollar amount of your benefit for 2025, taking into account the COLA. If you have a “My Social Security” account, you can access your notice even earlier, around mid-November, through your Message Center.
If you choose to receive your notice electronically, you can set up an alert to get notified as soon as it’s available. Otherwise, the physical letters will be mailed out throughout December. Because the SSA processes millions of notices, if yours doesn’t arrive right away, they recommend waiting until January before contacting them.
Payments
January 2025: The first COLA-increased Social Security checks will arrive in January 2025. However, the exact date will depend on your birth date and the specific Social Security program you’re enrolled in. The payment schedule is as follows:
- Born 1st – 10th: Benefits are paid on January 8th.
- Born 11th – 20th: Benefits are paid on January 15th.
- Born 21st – 31st: Benefits are paid on January 22nd.
While most beneficiaries will see the increase in January, SSI recipients will receive their adjusted payments earlier, on December 20th, 2024. This exception is because January 1st is a federal holiday, so payments are shifted to the last business day of December.
Benefit
Knowing how the COLA impacts your Social Security check can be straightforward. For example, if you receive $1,500 monthly, a 2.5% COLA would add $37.50, raising your new payment to $1,537.50. Though the COLA is designed to offset inflation, keep in mind that the actual boost in purchasing power may vary depending on the overall cost increases in the economy.
For many retirees, this adjustment can make a meaningful difference, helping to cover rising expenses in healthcare, housing, and other daily necessities. However, it’s essential to monitor your expenses and plan your budget accordingly to ensure that any increase in benefits meets your financial needs.
For those not yet receiving benefits, knowing these calculations can be useful in planning when to claim Social Security. Timing your claim at full retirement age or later can ensure you receive the highest possible PIA, making COLA increases even more impactful in the future.
Keeping these dates in mind and staying informed about changes will allow you to maximize your benefits and plan for the coming year.
FAQs
When will the 2025 COLA be announced?
The official announcement will be made on October 10, 2024.
How much will the 2025 COLA increase be?
The projected increase is around 2.5%, but it may vary.
When will I receive my first increased payment?
It depends on your birth date, but generally in January 2025.
Can I view my COLA notice online?
Yes, through the My Social Security account.
When will SSI recipients get their COLA payments?
SSI recipients will receive their COLA payments on December 20, 2024.
