The Social Security Administration recently announced a 2.5% cost-of-living adjustment (COLA) on Social Security and Supplemental Security Income benefits payable for December 2024, favorably impacting millions of people. Read on for more details about the latest Social Security COLA.
Key Takeaways
- Over 70 million retirees stand to receive a 2.5% cost-of-living adjustment (COLA) on their monthly retirement payouts, beginning in January 2025.
- The COLA boost, which is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), is designed to combat against the wealth-eroding effect of inflation.
- For specifics on the amount and timing of your COLA, visit your my Social Security account.
Monthly Payout Increase From the SSA
If you are one of the approximately 70 million retirees receiving benefits from the Social Security Administration (SSA), you can expect your monthly payout to increase, beginning in January 2025. The reason for the boost is the SSA’s annual cost-of-living-adjustment (COLA), which exists to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation.
The latest Social Security COLA is 2.5%, which translates to an average payout increase of around $50 per month. As outlined below, the exact effective date of date of the increase depends on your birth date:
- If you were born between the 1st and 10th of your birth month, your increase will commence on January 8, 2025.
- If you were born between the 11th and 20th of your birth month, your increase will commence on January 15, 2025.
- If you were born between the 21st and the end of your birth month, your increase will commence on January 22, 2025.
The implementation timing for COLA adjustments for SSI is different from the timing for standard Social Security benefits. Because the normal SSI payment date is the first of the month and January 1 is a holiday, SSI payments for January are always made at the end of the previous December. So, SSI COLA adjustments effective December 2024 will also be received in December 2024.
The latest COLA is lower than recent years, because the measure of inflation to which COLA is linked, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has been on a downward trend. The COLAs implemented for the past 7 years (effective each December, but receivable beginning each January) are as follows:
| Effective Date | Receivable Date | COLA |
| December 2017 | January 2018 | 2.0% |
| December 2018 | January 2019 | 2.8% |
| December 2019 | January 2020 | 1.6% |
| December 2020 | January 2021 | 1.3% |
| December 2021 | January 2022 | 5.9% |
| December 2022 | January 2023 | 8.7% |
| December 2023 | January 2024 | 3.2% |
How Is the Social Security COLA Calculated?
The SSA specifies a formula for determining each COLA. According to the formula, COLAs are based on increases in the CPI-W, as computed by the Bureau of Labor Statistics in the Department of Labor.
A COLA effective for December of the current year (receivable beginning in January of the following year) is equal to the percentage increase, if any, in the CPI-W from the average for the third quarter of the current year to the average for the third quarter of the last year in which a COLA became effective. If there is an increase, it must be rounded to the nearest tenth of one percent. If there is no increase, or if the rounded increase is zero, there is no COLA for the year.
Current COLA Calculation
The last year in which a COLA was implemented was 2023. Therefore, the SSA’s formula necessitates that the average CPI-W for the third quarter of 2024 be compared to the average CPI-W for the third quarter of 2023 to determine whether a COLA is warranted.
As illustrated below, the average CPI-W for the third quarter of 2024 is 308.729 (rounded to the nearest one-tenth of one percent), and the average CPI-W for the third quarter of 2023 is 301.236 (rounded to the nearest one-tenth of one percent).
Current COLA Calculation
| CPI-W | CPI-W | |
| 2024 | 2023 | |
| July | 308.501 | 299.899 |
| August | 308.640 | 301.551 |
| September | 309.046 | 302.257 |
| Q3 Total | 926.187 | 903.707 |
| Average | 308.729 | 301.236 |
Based on these inputs, the COLA calculation, with the result rounded to the nearest one-tenth of one percent, is as follows:
COLA = (2024 Average CPI-W – 2023 Average CPI-W) ÷ 2023 Average CPI-W × 100
COLA = (308.729 – 301.236) ÷ 301.236 × 100 = 2.5%
Where Can I Find My Social Security COLA?
In December 2024, Social Security COLA notices will be available online to most beneficiaries in the “Message Center” of their my Social Security account. This year, Social Security beneficiaries will receive a newly designed and improved one-page COLA notice that makes it easier to find critical information. The simplified COLA notice uses plain language and provides exact dates and dollar amounts of a person’s new benefit amount and any deductions.
COLA notices are also sent via mail, but you can opt out of receiving paper notices via your my Social Security account. You can also choose how you want the SSA to let you know when your COLA notice is ready for viewing (i.e., email only, text message only or both email and text message).
Editor Norah Layne contributed to this article.
