If you're someone who gets a big chunk of your retirement income from Social Security, then you may be itching to know what 2025's cost-of-living adjustment, or COLA, will amount to. Each year, Social Security benefits are eligible for an automatic COLA. And the higher that number is, the more buying power you stand to enjoy.
But as eager as you may be to learn about 2025's Social Security COLA, you're going to have to sit tight a bit longer. Social Security COLAs are determined using inflation data from the third quarter of the year. Since we're not quite done with 2024's third quarter, we don't have a full data set to work with just yet. In fact, the Social Security Administration won't be able to announce an official COLA until Oct. 10 .
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But there are estimates out there as to what 2025's Social Security COLA might entail. And it's important to know what sort of monthly raise you might be looking at so you can plan accordingly.
Your monthly paychecks could go up by $48
The average retired worker on Social Security today collects $1,920.48 per month. Meanwhile, the most recent estimate of next year's Social Security COLA by the nonpartisan Senior Citizens League is 2.5%.
If we do the math, we see that the average retired worker is looking at a $48 boost to his or her monthly Social Security checks. That's $576 more per year, which isn't a life-changing amount, but it also isn't nothing.
Medicare Part B will be the wild card factor
It may be that you're collecting Social Security but you haven't yet enrolled in Medicare , either because you aren't old enough or because you have group health coverage through a job and therefore don't need it. In that case, once an official Social Security COLA announcement comes through, you can run the numbers to see how much of a raise you'll get based on your specific monthly benefit.
But if you're enrolled in Medicare, you'll need more than just an official Social Security COLA announcement to see how much your monthly benefits will increase in 2025. That's because seniors who are signed up for both programs at the same time have their Medicare Part B premiums deducted from their Social Security benefits.
If the cost of Medicare Part B rises a lot in 2025, then you monthly Social Security benefit won't increase as much. So while the average retired worker may be looking at $48 more per month before accounting for Medicare Part B , that raise could get whittled down if the cost of Part B rises substantially.
This year, the cost of Medicare Part B rose by $9.80. A similar increase could erode 2025's Social Security COLA for a lot of people.
For this reason, it's important to look at the big picture in the course of figuring out how much your monthly income is likely to increase in the new year. And if you're not happy with the number you're seeing, you may want to take steps to improve your financial picture.
Those could include rethinking some expenses or finding ways to turn your home into a cash source, such as renting out a room or downsizing and pocketing your sale proceeds. You could also turn to the gig economy for a flexible job that puts extra cash in your pocket. Doing so could buy you some breathing room even if 2025's Social Security COLA increases your monthly benefits by more than $48.
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