Cost-of-living adjustments (COLAs) are increases in Social Security and Supplemental Security Income (SSI) payments to keep pace with inflation. The COLA for 2025 will be determined in October 2024, based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W measures the average change in prices paid by urban wage earners and clerical workers for a basket of goods and services.
The 2025 COLA is expected to be around 5.9%, which would be the largest increase since 1981. This increase is due to the recent surge in inflation, which has been driven by a number of factors, including the COVID-19 pandemic, the war in Ukraine, and supply chain disruptions. The COLA will help to ensure that Social Security and SSI beneficiaries can keep up with the rising cost of living.