Social Security Announces Cost of Living Increase

Last week, the Social Security Administration (SSA) announced that the Cost of Living Adjustment (COLA) for 2025 will be a 2.8 percent increase. This increase is in line with previous projections for next year and long-term averages for the adjustment.

The dollar amount increase to checks will vary depending on a person’s benefit amount, but the average Social Security Retirement benefit, $2,008.31 in July 2025, will grow by about $56. The agency announcement notes that, like last year, beneficiaries will receive a simplified, one-page notice that includes personalized information about the COLA with exact dates and dollar amounts. 

The 2026 Medicare Part B premium has not been released, but early projections anticipate an increase of $21.50. The official announcement is expected in early November.

Social Security COLA Calculation Draws Criticism

The Social Security COLA, which is calculated each year based on the rate of inflation using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), has drawn criticism for failing to match up with the experience of inflation or true expenses for older adults and people with disabilities. Costs in retirement have outpaced inflation, according to recent research from Goldman Sachs Asset Management that has found that while retirees’ spending increased at a 3.6% annual rate from 2000 to 2023, the consumer price index went up by 2.6% over that time. Advocacy groups have suggested that alternative measures for the COLA, like Consumer Price Index for the Elderly, or CPI-E, would better reflect the economic realities faced by most people who rely on Social Security. That index puts greater emphasis on categories like medical care, housing and recreation, according to the Bipartisan Policy Center.