when will 2025 cola be announced for social security

2 min read 01-12-2024

when will 2025 cola be announced for social security

The annual cost of living adjustment (COLA) for Social Security benefits is a significant event for millions of retirees and beneficiaries. This adjustment, based on inflation, directly impacts the monthly payments received. So, when can we expect the announcement for the 2025 COLA? Let's explore.

Understanding the Social Security COLA

The Social Security Administration (SSA) calculates the annual COLA using the Consumer Price Index for Wage Earners and Clerical Workers (CPI-W). This index measures the average change in prices paid by urban wage earners and clerical workers for a basket of consumer goods and services. The increase in the CPI-W from the third quarter of one year to the third quarter of the following year determines the COLA percentage.

How the COLA is Calculated

The SSA compares the average CPI-W for the third quarter (July, August, and September) of the current year to the average CPI-W for the third quarter of the previous year. The percentage increase (or decrease, though extremely rare) becomes the COLA. For example, if the CPI-W rose by 3% between the third quarters, the COLA would be 3%.

When Will the 2025 COLA Be Announced?

The SSA typically announces the COLA for the following year in October. Therefore, the announcement for the 2025 COLA is expected in October 2024. This announcement will provide the specific percentage increase (or decrease) that will affect Social Security benefits starting in January 2025.

Factors Affecting the Announcement Timing

While the October announcement is the norm, unforeseen circumstances could potentially cause a slight delay. However, the SSA strives for consistency and transparency in its process. Any deviations from the expected timeline are usually communicated well in advance.

What to Expect After the Announcement

Once the 2025 COLA is announced, the SSA will update its website and publications with the new benefit amounts. You can also expect to receive a notice from the SSA informing you of your adjusted monthly benefit.

Other Important Dates to Remember

September: The CPI-W data for the third quarter is released. This data is crucial for the COLA calculation.
October: The SSA typically announces the COLA percentage for the following year.
December: The SSA often releases updated benefit charts showing adjusted payments for the new year.
January: The increased benefits, reflecting the new COLA, begin to be paid.

Frequently Asked Questions (FAQs)

Q: How is the COLA calculated precisely?

A: The COLA is calculated by comparing the average CPI-W for the third quarter (July, August, September) of the current year with the average CPI-W for the third quarter of the previous year. The percentage change becomes the COLA.

Q: What if the CPI-W decreases? Will the COLA be negative?

A: While highly unlikely, if the CPI-W decreases, the COLA could be zero, meaning benefits would remain unchanged. A negative COLA is extremely rare and has never happened.

Q: Where can I find the official announcement of the 2025 COLA?

A: The official announcement will be on the Social Security Administration's website (ssa.gov). You can also find updates through their publications and social media channels.

By staying informed about these key dates and following the SSA's official channels, you can stay updated on the 2025 COLA and its impact on your Social Security benefits. Remember to check the SSA website regularly for the latest information.