Every year, the government adjusts benefits like SSI (Supplemental Security Income), SSDI (Social Security Disability Insurance), and VA (Veterans Affairs) to match the rising cost of living. This adjustment is called the COLA, or Cost of Living Adjustment.
In 2025, millions of Americans are hoping for a helpful boost in their monthly payments to keep up with daily expenses like food, rent, and healthcare. So how much will the increase be, when will it happen, and how can you prepare? Let’s break it down simply.
How Much Will the COLA Increase Be in 2025?
Based on 2024 inflation trends, experts predict the COLA increase will be between 2% and 3%. While it’s smaller than the big 8.7% raise in 2023, it still helps cover rising living costs.
Example of a 2.5% COLA Increase:
If you receive $1,000 per month now:
- 2.5% increase = $25 more
- New monthly benefit = $1,025
Even if it seems like a small amount, it adds up over time, especially for people living on fixed incomes.
Who Will Get the COLA Increase?
The increase applies to these benefit programs:
- SSI (Supplemental Security Income)
- SSDI (Social Security Disability Insurance)
- VA Benefits (for military veterans)
If you’re part of any of these, you’ll automatically get the new, higher payment starting January 2025.
How Is the COLA Calculated?
The Social Security Administration (SSA) uses a special index called the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers). It tracks the price changes in everyday things like:
- Food
- Housing
- Gas and energy
- Healthcare
If these prices go up, so does your benefit. The SSA compares average prices from July to September each year to the same months from the year before.
Why Is the COLA So Important?
Many people who receive SSI, SSDI, or VA benefits live on limited income. If prices go up and benefits stay the same, it becomes harder to afford basic things like groceries and medicine.
That’s where COLA helps:
- It keeps your benefits on pace with inflation
- It reduces the impact of rising medical or rent costs
- It protects people who can’t work or earn more income
What If COLA Doesn’t Match Inflation?
Sometimes, prices go up faster than COLA increases. For example:
- If inflation is 4%, but COLA is only 2.5%, then your benefit won’t fully cover your rising expenses.
That’s why it’s a good idea to budget carefully, and use other support programs when needed.
How to Prepare for the 2025 COLA Increase
Here are some practical tips to make the most of the COLA boost:
1. Track Your Expenses
Keep a notebook or app to record spending on food, transport, medicines, and bills.
2. Adjust Your Budget
Even an extra $20–$50 a month can help if you use it wisely. Prioritize important items first.
3. Check Other Assistance Programs
You might also qualify for:
- SNAP (for groceries)
- Medicaid (for health)
- Housing assistance
4. Look for Small Income Options
If you’re able, explore part-time or remote work, or community programs that offer help.
When Will the 2025 COLA Be Announced?
The SSA usually announces the COLA increase in October, and it takes effect in January 2025. The exact percentage will depend on inflation between July and September 2024.