Based on inflation, the latest projections for Social Security’s 2025 cost-of-living adjustment, or COLA, put is in the area of 2.6%, or about $45 per month for the average beneficiary.
That figure, based on early projections from the advocacy group The Senior Citizens League, is below 2024′s 3.2% and far behind 2023′s historically large 8.7%. But it’s not close to the lowest COLAs beneficiaries ever received, according to data from the Social Security administration.
How are COLAs determined?
COLAs, designed to prevent benefits from being eroded by inflation, are determined by data from the Consumer Price Index for Urban Wage Earners and Clerical Workers which tracks the average price of a basket of goods. The average CPI-W for the third quarter of the previous year is compared to the third quarter of the current year and, if there is no increase, there is no COLA.
If there is an increase in CPI-W, Social Security benefits will increase by the same percentage points.
Some lawmakers want to change how COLA is determined. You can see more on that here.
Annual Social Security COLAs were first put in place in 1975. Prior to that time, beneficiaries had to wait for a special act of Congress to receive a raise.
What’s the highest COLA ever received? What was the lowest?
2022′s 8.7% increase was the largest since 1981 when inflation pushed Social Security benefits up 11.2%. The 1980 COLA was even higher at 14.3%.
On the opposite end of the spectrum, three years – two of which concurred consecutively – had no increase at all. In 2009 and 2010, as well as 2015, Social Security recipients received no increase. 2016′s increase was 0.3 percent.
Social Security’s 2025 COLA will be announced in October, going into effect in January 2025.
Read More: Here’s the smallest cost-of-living adjustment Social Security ever paid