In 2024, seniors on Social Security saw their monthly benefits increase by 3.2%. And at this point, many recipients are wondering what next year’s cost-of-living adjustment, or COLA, will look like.

If you’re in that boat, here’s some potentially frustrating news. You’re going to have to sit tight until October to learn about your 2025 Social Security COLA. But there’s a big reason for that.

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How COLAs are calculated

Social Security COLAs are calculated based on third quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). More specifically, current year data is compared to previous year data to look for a change.

If the average CPI-W reading from 2024’s third quarter is higher than the average CPI-W reading from 2023’s third quarter, it indicates a rise in the cost of consumer goods and services. And from there, Social Security benefits are increased accordingly.

However, final CPI-W data for the third quarter doesn’t become available until October. As such, that’s the month the Social Security Administration announces not just the following year’s COLA, but also, other key changes to the program, including the earnings-test limit, wage cap, and maximum monthly benefit.

You can get a sneak peek, but it may not be so accurate

Even though there’s really little point in trying to estimate next year’s Social Security COLAs ahead of October, some experts like to do it anyway. As such, you can browse the internet now to try to get a sense of what sort of Social Security raise you may be looking at in 2025.

The nonpartisan Senior Citizens League, for example, is currently projecting that 2025’s Social Security COLA will amount to 2.6%. But that’s based on inflation data to date — not third quarter data. As such, that 2.6% estimate should be taken with a grain of salt.

Of course, the closer to October we get, the more accurate those COLA projections might start to be. But even so, your best bet is really to not get hung up on a specific COLA until the official number is announced so your budget isn’t thrown off-course.

Remember, too, that a COLA announcement is only part of the picture when it comes to determining how much your senior income will rise in the coming year. The cost of Medicare, if you’re enrolled, will also play a role.

Seniors on Medicare pay their Part B premiums directly out of their Social Security benefits. But when the cost of Medicare Part B rises from one year to the next, it can eat away at a COLA significantly.

As of January, the average monthly Social Security benefit was $1,907. If next year’s COLA ends up amounting to 2.6%, that would result in an average increase of about $50. However, if the cost of Medicare Part B rises by $10, that’ll only result in an extra $40 per month for the typical Social Security beneficiary.

That’s why it may not be a great use of your time to try digging around for 2025 COLA information now. Not only do we need more inflation data to come in, but we also need to hear what Medicare will be doing. A better bet may be to spend some time examining your budget and seeing if there’s room to make cuts so you have more financial wiggle room.

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