2025 Social Security COLA: Your top 5 questions, answered

Social Security serves as a critical source of income for millions of retired seniors. And for those who rely on those benefits heavily to pay the bills, annual raises often spell the difference between being able to make ends meet and struggling financially.

Each year, Social Security benefits are eligible for a cost-of-living adjustment, or COLA. COLAs are supposed to help recipients keep up with inflation so they don't fall behind as living costs rise naturally over time.

Now that we're getting closer to 2025, you may be eager to learn more about next year's Social Security COLA. Here are answers to some of the burning questions you might have.

1. When will an official COLA be announced?

Social Security COLAs are calculated based on third quarter inflation data. Because of this, the Social Security Administration (SSA) cannot release an official COLA prior to October. And the exact date of a COLA announcement hinges on when inflation data for September becomes available. This year, that data will be released on October 10.

2. How much of a COLA should I expect?

Social Security COLAs are based on changes in inflation during the months of July, August, and September. There's no September reading as of now, but that data is available for July and August. And based on what's known so far, experts are calling for a 2.5% Social Security COLA in 2025.

However, that number could wiggle upward or downward, depending on how an official inflation reading for September shakes out. Either way, though, you should expect 2025's Social Security COLA to be lower than the 3.2% raise that came through at the start of 2024.

3. When will my COLA take effect?

COLAs kick in at the start of the new year. The first monthly Social Security payment you receive in 2025 should therefore be higher.

More:Social Security COLA shrinks for 2025 to 2.5%, the smallest increase since 2021

4. How much will my monthly Social Security check increase after 2025's COLA gets applied?

The extent to which your monthly Social Security payments will increase in 2025 will hinge on a few factors. These include an official COLA number, whether you're enrolled in Medicare, and whether the cost of Part B rises in 2025.

To give you a sense of what to expect, if you collect $2,000 in Social Security today, a 2.5% COLA would raise your monthly benefit by $50 initially. If you're not yet enrolled in Medicare, that $50 increase should hold. If you're a Medicare enrollee, though, it means you pay your Part B premiums out of your Social Security checks automatically. If the cost of Part B rises by $10 a month in 2025, then your $50 raise will be whittled down to $40.

5. How can I find out about 2025's COLA once details become available?

As mentioned, the SSA will make an official COLA announcement on October 10. Your best bet is to start by checking the news section of the SSA's website for information that day. There's a chance that update will be made available elsewhere on the site, but the news section is generally the right source for updates of this nature.

Soon enough, everyone should have more clarity on next year's Social Security COLA. For now, you can use the above information to start making financial decisions for 2025 -- or at least get a sense of what sort of changes you might be looking at.

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