Every year, Social Security adjusts benefit amounts to account for inflation through a cost-of-living adjustment (COLA).
Social Security provides people with an income when they retire or can’t work due to disability. Those who are retired can typically start receiving their Social Security benefits as early as age 62.
The Social Security Administration (SSA) announced the 2025 COLA on Thursday, Oct. 10. Some people online claimed it is the lowest COLA since 2021.
THE QUESTION
Is Social Security’s 2025 cost-of-living adjustment (COLA) the lowest since 2021?
THE SOURCES
THE ANSWER
Yes, Social Security’s 2025 cost-of-living adjustment (COLA) is the lowest since 2021.
WHAT WE FOUND
On Thursday, Oct. 10, the Social Security Administration (SSA) announced that beneficiaries will receive a 2.5% increase in their benefits beginning in January 2025.
The 2025 COLA is the lowest since 2021, which AARP says reflects a “continued cooling of inflation following a surge in consumer prices during the COVID-19 pandemic.”
In 2021, the COLA increase was 1.3%. It jumped to 5.9% in 2022 and 8.7% in 2023 as inflation skyrocketed. The COLA increase was lower at 3.2% in 2024 once inflation began to normalize.
With the 2.5% COLA increase for 2025, the estimated average Social Security retirement benefit will increase by $49 a month, according to SSA.
Social Security will begin notifying people about their new 2025 benefit amount by mail beginning in early December, SSA says. Those who want to know their benefit amount sooner can find their COLA notice online through their my Social Security account.
Social Security recipients will need to set up their accounts by Nov. 20, 2024, to get their COLA notice online, according to SSA.
How the COLA is calculated
The COLA is calculated based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), an inflation gauge measured by the U.S. Bureau of Labor Statistics (BLS). It measures the average change over time in the prices that workers are paying in a “basket of consumer goods and services.”
SSA explains on its website that the COLA is equal to the percentage increase in the CPI-W from the third quarter average of the previous year to the same average from the current year. If there is an increase, it’s rounded to the nearest tenth of a percent. That same increase is applied to monthly Social Security payments.
To determine the 2025 COLA, SSA compared the CPI-W for July, August and September of 2023 to the same period in 2024.
The CPI-W increased 2.9% annually in July, 2.4% annually in August and 2.2% annually in September, BLS data show.
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