As the calendar moves closer to 2025, millions of Americans who depend on Social Security are paying close attention to changes in their monthly benefits. Each year, the cost-of-living adjustment, commonly known as COLA, plays a key role in shaping how far those benefits will stretch in the months ahead. While recent years have brought unusually large increases, the upcoming adjustment presents a more modest rise that still carries important implications for retirees, people with disabilities, survivors, and individuals receiving Supplemental Security Income.
Although a smaller percentage increase may not make headlines in the same way as record-breaking adjustments, its real-world impact can be significant. Rising prices for housing, healthcare, food, and utilities mean that even incremental changes can affect day-to-day financial stability. For many households, the question is not just how much benefits will increase, but whether that increase will be enough to keep up with ongoing expenses.
Understanding the Cost-of-Living Adjustment (COLA)
The Social Security cost-of-living adjustment exists to help protect beneficiaries from the effects of inflation. Inflation refers to the gradual increase in prices over time, which can reduce the purchasing power of a fixed income. Without periodic adjustments, Social Security benefits would slowly lose value as everyday expenses rise.
COLA adjustments are applied automatically and do not require beneficiaries to take action. When inflation meets certain criteria, benefits are increased beginning in January of the following year. This system was designed to provide stability and predictability, especially for individuals who rely heavily on Social Security as their primary or sole source of income.
