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Social Security's big 2025 COLA announcement is just 10 days away. Here's what to expect.

Social Security's big 2025 COLA announcement is just 10 days away. Here's what to expect.

If you're one of the millions of Americans who rely on Social Security to make ends meet, you might want to know what your cost of living adjustment (COLA) will be in 2025. At the beginning of 2024, benefits for social assistance recipients increased by 3.2%. And you may be wondering whether you can expect a similar boost in the new year.

The Social Security Administration (SSA) will not be able to make an official COLA announcement until October 10th. This is because Social Security COLAs are calculated based on third quarter inflation data.

Social Security Cards.Social Security Cards.

Image source: Getty Images.

Even though the third quarter of the year just ended, it will be some time before the Bureau of Labor Statistics releases an official reading of the Consumer Price Index for urban wage earners and office workers, on which Social Security COLAs are based. And the SSA needs this data to calculate a 2025 COLA.

However, you don't necessarily have to wait until October 10 to find out everything you need to know about the 2025 Social Security COLA. Here is some information that is already available.

An initial estimate calls for a smaller increase than in 2024

While we are still missing some key economic data needed to officially calculate a 2025 COLA, experts have a working estimate based on the information they already have. And you should know that the current forecast for 2025 is a Social Security COLA of 2.5%. This is a significant decrease compared to the 3.2% COLA achieved in early 2024.

But since Social Security COLAs are tied to inflation, a smaller increase in benefits isn't all bad news. As the pace of inflation has slowed, consumers of all ages are benefiting from less drastic price increases. So what you lose in the form of a smaller COLA, you could gain in the form of relief at the gas pump, at the grocery store, and just about anywhere.

You may or may not receive your 2025 COLA in full

Once an official Social Security COLA is announced, you can take a look at your monthly benefit and apply that percentage to see what increase you can expect. But don't forget to factor in an increase in Medicare Part B when calculating these numbers.

If you are enrolled in Social Security and Medicare at the same time, your Part B premiums will automatically be deducted from your monthly Social Security checks. And if Part B costs rise dramatically in 2025, that will result in a smaller COLA for you.

A big day for Social Security

You may plan to check the SSA website for news of a COLA announcement on October 10th. However, you should be aware that not only a 2025 COLA will be released on this day.

SSA will also update important information about the 2025 program, including:

  • A new earnings limit that applies to people who work and receive Social Security at the same time

  • A new wage cap that determines how much income is taxed for Social Security purposes

  • A new maximum monthly benefit

  • A new income requirement to receive the work benefits necessary for eventual Social Security eligibility

So even if you're not too worried about what the Social Security COLA will be for 2025, it's still worth tuning in on October 10 to learn more about these other important changes.

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Social Security's big 2025 COLA announcement is just 10 days away. Here's what to expect. was originally published by The Motley Fool

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