October 10 Is a Huge Day for Social Security This Year. Here's Why.

Social Security has clearly been around for a really long time. Yet each year, there's one change that seniors eagerly await -- a cost-of-living adjustment, or COLA.

Social Security COLAs were implemented years back to help beneficiaries maintain buying power in the face of inflation. Someone with a $1,500 monthly Social Security benefit in 2010 would be at a huge disadvantage in 2024 in the absence of continuous raises, since it's far more expensive to exist today than it was 14 years ago.

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Meanwhile, many Social Security recipients can't wait to find out what their 2025 COLA will look like. And while there are estimates out there , the only way to know what that number will look like for sure is to look at the data September's Consumer Price Index (CPI).

Specifically, Social Security COLAs are calculated based on third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers, a subset of the CPI. And all of that information is scheduled to be released on Oct. 10. From there, a number of key Social Security changes are likely to be announced.

An updated COLA and more

Come Oct. 10, the Social Security Administration should be in a position to officially to finalize a 2025 COLA. It should also be able to announce other key changes to the program for 2025, including:

• The earnings-test limit, which applies to seniors who are working and collecting Social Security at the same time before reaching full retirement age
• The wage cap, which dictates how much earnings are subject to Social Security taxes
• The value of a work credit, which wage earners need to collect enough of to be eligible for Social Security in retirement

Now it is worth noting that 2025's Social Security COLA is likely to be less than 2024's based on the inflation data we have to date. And actually, that's not a bad thing, because a smaller COLA would be indicative of slowing inflation.

One thing we may not know on Oct. 10, however, is the extent to which the cost of Medicare Part B will rise in 2025. Seniors who are enrolled in Social Security and Medicare at the same time have their Part B premiums deducted from their benefits automatically. If the cost of Part B increases notably, the typical Medicare enrollee may be left with a fairly small COLA in 2025.

We'll have to wait and see

Clearly, there's still a good stretch of time between now and Oct. 10. So if you're someone who keeps checking for updates on a 2025 Social Security COLA, you may want to stop spinning your wheels and instead focus your efforts on reviewing your retirement budget and figuring out ways to reduce spending if money has gotten tight.

Of course, there will likely be a series of COLA estimates between now and October, and it's natural to want to keep tabs on them. But remember, all of that data is somewhat useless until we have September's inflation reading. So if you want to know for sure what your Social Security raise will look like for next year, you'll have to sit tight until Oct. 10.

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