What Is the Next Social Security COLA Increase?
Learn about the upcoming Social Security COLA and its significance for your future financial well-being.
A Cost-of-Living Adjustment (COLA) represents an increase in Social Security and certain other federal benefits. This adjustment helps to counteract the effects of inflation, aiming to preserve the purchasing power of beneficiaries’ income over time. It ensures that the value of these benefits does not erode due to rising prices for goods and services.
How COLA is Calculated
The calculation of the annual COLA is determined by a specific measure of inflation. This measure is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is regularly updated by the Department of Labor’s Bureau of Labor Statistics (BLS). The Social Security Administration (SSA) uses this index to determine if an adjustment is necessary.
To calculate the COLA, the SSA compares the average CPI-W from the third calendar quarter (July, August, and September) of the current year to the average for the third quarter of the most recent year a COLA was applied. If there is an increase in the CPI-W during this period, that percentage difference, rounded to the nearest one-tenth of one percent (0.1%), becomes the COLA. If the CPI-W shows no increase or a decrease, no COLA is applied for that year, ensuring benefits are not reduced.
When the 2025 COLA Was Announced
The official 2025 COLA was announced by the Social Security Administration on October 10, 2024. This announcement confirmed a 2.5% increase for Social Security benefits and Supplemental Security Income (SSI) payments.
For future adjustments, such as the 2026 COLA, the announcement follows a consistent timeline. It typically occurs in October of the preceding year, after the Bureau of Labor Statistics releases the September CPI-W data. This allows the SSA to finalize the calculation based on the complete third-quarter inflation trends. Any figures or projections regarding upcoming COLAs prior to this official October announcement are estimates based on available data.
Who Receives the COLA
The COLA primarily benefits individuals receiving Social Security payments, encompassing retirees, survivors, and those with disabilities. Recipients of Supplemental Security Income (SSI), a federal program providing financial aid to aged, blind, and disabled individuals, also receive this adjustment.
Once the COLA percentage is announced, it is applied to the gross monthly benefit amount for all eligible individuals. The adjusted benefit amounts become effective with the December payment of the current year, which beneficiaries typically receive in January of the following calendar year.