Social security benefits will increase next year. The amount of the benefits for recipients is expected to be announced in the fall.
The cost-of-living adjustment, commonly referred to as COLA, has long been a component of Social Security benefits. Lawmakers first introduced it in 1975. The adjustment is designed to keep payments in line with inflation so purchasing power doesn’t decline over time.
Still, the amount of the annual benefit increase is not set in stone. In 2024, Social Security benefits increased by 3.2 percent. In 2023, pensioners and other benefit recipients were given a historic 8.7 percent increase due to runaway inflation caused by the country’s recovery from the coronavirus pandemic. In most cases, an annual benefit increase occurs, but sometimes it is not – as in 2009, 2010 and 2015.
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Here’s everything we know about the upcoming changes to Social Security benefits and when you can expect them.
When will COLA be announced?
The next COLA update is scheduled to be announced in October. A specific date has not been confirmed, but rates were announced for 2022 and 2023 on October 12.
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How is the COLA calculated?
The COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks spending by working Americans. The Bureau of Labor Statistics conducts a quarterly survey to determine the spending habits of American citizens, analyzing price fluctuations for about 80,000 products. The resulting data is then combined into an index that measures percentage changes.
Each year, the COLA is based on the average CPI-W in the third quarter of the current year and the average CPI-W in the same period the previous year. If there is an increase, that percentage is rounded to the nearest tenth of 1 percent and that is the new COLA.
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Sometimes there is no COLA, but it is almost certain that this year there will not be. In 2015, there was no change in the inflation rate between the third quarter of 2014 and 2015, so Social Security benefits did not increase in 2016.
Who gets the increase and when?
All programs administered by the SSA are subject to the annual COLA. These include the following:
- Pensions, including spouses who are entitled to social security benefits based on their partner’s income
- Survivor benefits
- Supplementary security income
- Social insurance for disability
Those receiving pensions can expect an increase in their benefits in December. Recipients of disability benefits will receive new amounts from January 2025.
How much will it cost?
The 3.2 percent increase for 2024 increased the average retiree’s monthly pension by $59, from $1,847 to $1,906. However, the pension amount is different for each recipient, so the increase could be higher or lower.
While beneficiaries wait for the official update, expert panels are forecasting the percentage by which benefits could increase next year. The latest prediction from the Senior Citizen’s League, a nonpartisan organization, is 2.63 percent, while financial advice website Motley Fool predicts a slightly higher increase of 2.8 to 2.9 percent.
“It is almost certain that the average CPI-W in the third quarter will be higher than the average in the second quarter,” wrote Motley Fool’s Keith Speights, explaining that the average CPI-W has increased in the third quarter compared to the second quarter almost every year since 1974.
Based on the Senior Citizen’s League’s projections and the SSA’s own estimates, average benefit amounts could increase as follows:
| All retired employees | 1,907 USD | 1,957 USD |
| Elderly couple, Both receive social benefits |
$3,033 | 3,113 USD |
| Widow or widower alone | $1,773 | $1,820 |
| All disabled employees | 1,537 USD | $1,577 |
If the COLA increase is between 2.6 and 2.9 percent, it would be the lowest annual increase since the 1.3 percent adjustment in 2021. While this means that inflation is easing and prices are not rising at the same rate as in previous years, it also means that benefit recipients can expect a smaller increase than in 2022 and 2023.
