Social Security will set its 2025 COLA in a few days. Here's what you should know.

The roughly 70 million people who receive Social Security payments will soon learn how much they will receive in their 2025 benefit checks. The program's annual cost of living adjustment (COLA) will be announced in a few days.

Each fall, the Social Security Administration sets its annual COLA based on the current inflation rate. This is part of an overhaul of the program that began in the 1970s and ensures that seniors and other benefit recipients do not lose purchasing power in the face of rising prices.

When will the 2025 Social Security COLA be announced?

Typically, the Social Security Administration announces its annual COLA on the same day that the Labor Department releases its September inflation report, with the benefit announcement coming shortly after the inflation data.

The September Consumer Price Index report is scheduled to be released on Thursday, October 10.

What will the Social Security COLA be in 2025?

The cost of living adjustment is expected to occur by 2025 come in at around 2.5%said the Senior Citizens League (TSCL), an advocacy group for older Americans.

That will be the lowest COLA since 2021, when seniors received a 1.3% adjustment due to the pandemic's low inflation rate. Because inflation rose sharply in 2022 and 2023, Social Security provided unusually high COLAs for those years, 5.9% and 8.7%, respectively.

Seniors received a 3.2% COLA for the current year.

How would this affect Social Security benefits?

According to the Social Security Administration, the average Social Security check for retirees in 2024 is $1,907.

If the agency announces a 2.5% COLA increase for 2025 as projected, the typical benefit check would increase by about $48 per month, for a total of $1,955 per payment.

How much is the COLA increase in VA benefits for 2025?

Earlier this month, Congress passed a new law tying veterans' benefits to Social Security cost-of-living increases. The law, called the Veterans' Compensation Cost-of-Living Adjustment Act of 2024, directs the VA to increase veterans' benefits by the same inflation adjustment percentage as Social Security payments.

“Increasing our veterans’ hard-earned benefits to keep up with the cost of living is a necessary cost of war,” Sen. Jon Tester, a Montana Democrat who co-sponsored the bill, said in a statement.

The COLA increase for VA benefits applies to disability payments, clothing allowances, and dependency and compensation payments for surviving spouses and children, according to Military.com.

Based on the Senior Citizens League forecast, these VA benefits would increase by 2.5% next year.

What is the current inflation rate?

Inflation has cooled significantly after reaching a 40-year high of 9.1% in June 2022. The Federal Reserve implemented a flurry of interest rate hikes that helped reduce inflation, which was at 2.5% annualized in August – the lowest value in three years.

Inflation is expected to continue to cool, according to financial data firm FactSet, with economists forecasting that the rate of price increases fell to 2.3% in September.

The Social Security Administration sets its annual COLA based on inflation in the third quarter, July through September.

The agency takes the average inflation rate over this period from the so-called Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures the spending of working Americans. With inflation declining in recent months, the 2025 COLA is expected to be lower than in previous years.

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