The Cost of Living Adjustment (COLA) is a crucial component of Social Security checks in the United States, as it ensures an increase in the monthly payment
The cost-of-living adjustment (COLA) on Social Security benefits allows United States citizens to receive a little extra money each month. This increase is not intended to increase the wealth level of citizens, but to offset the impact of annual inflation.
However, the COLA increase is not the same each year, as it varies according to the specific inflation of each period. Each year has its own inflation rate and, therefore, its own cost-of-living adjustment. Depending on the increase in prices, check payments may increase to a greater or lesser extent.
COLA: How much will it increase in 2025?
Beginning January 2025, United States citizens receiving a Social Security check will experience a new COLA increase. This means that anyone with an approved retirement will be able to benefit from these additional dollars without inconvenience.
Although official figures have not yet been announced, it is estimated that the Cost of Living Adjustment (COLA) could be around 2.5%. This increase would be lower compared to 2024, but inflation has remained stagnant and has not caused a significant increase in prices in recent months.
If the increase is 2.5%, this would mean that for every $100 received, an additional $2.5 would be added each month. While this increase may not seem very large on a monthly basis, over the course of the year, considering the retirement check, it could represent a considerable amount.
What is the date to know the Cost of Living Adjustment in 2025?
The crucial month to get all the information on the Cost-of-Living Adjustment (COLA) is October. In approximately the second week of October, the percentage increase that the U.S. Government will apply to Social Security checks will be revealed. This is the time when the final increase in retirement payments will be released, so we will have to wait until that date to find out exactly how much our retirement check will increase.
The COLA calculation is based on the inflation observed during the months of July, August and September. Therefore, the increase in the Consumer Price Index for Urban and Clerical Workers (CPI-W) during these months is critical in determining the cost-of-living adjustment to be applied in the future. This data is key to establish the precise adjustment and, therefore, the increase in Social Security payments.
It is important to note that the COLA adjustment process is automatic. This means that no specific request will be necessary to receive the increase in retirement checks. The Social Security Administration will calculate the adjustment itself and apply it automatically.
Finally, the corresponding adjustment will be reflected in our first payment in 2025. In this way, we will not have to worry about requesting the increase, as the Administration will take care of the entire process and ensure that the adjustment is applied without us having to take any additional action.
How much did COLA 2024 increase?
Social Security and Supplemental Security Income (SSI) benefits for more than 71 million people in the U.S. increased by 3.2 percent in 2024.
The 3.2 percent Cost-of-Living Adjustment (COLA) will begin with benefits payable to more than 66 million Social Security beneficiaries in January 2024. Increased payments to approximately 7.5 million SSI beneficiaries will begin on December 29, 2023. (Note: Some people receive both Social Security and SSI benefits.)
The maximum amount of Social Security taxable earnings (taxable maximum) will increase to $168,600.
The earnings limit for workers who are under “full” retirement age (see the Full Retirement Age Calculator) will increase to $22,320. (We deduct $1 from benefits for every $2 earned over $22,320.)
The earnings limit for people who reach “full” retirement age in 2024 will increase to $59,520. (We deduct $1 from benefits for every $3 earned over $59,520 until the month in which the worker reaches “full” retirement age).
There is no earnings limit for workers who reach “full” retirement age or older throughout the year.