To calculate an official Social Security cost-of-living adjustment (COLA), we need three pieces of information: inflation data from July, August, and September.

We’ve had data from July and August available for quite some time at this point. But because September just ended, it’s too soon to have a reading from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the month, which is the index COLAs are measured by.

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Rather, that information is expected to be released on October 10. And once that happens, the Social Security Administration (SSA) can calculate a 2025 COLA officially.

However, there’s a working estimate of next year’s Social Security COLA based on CPI-W readings for July and August. And if that number is correct, then we can use it to get a sense of how much the average Social Security paycheck will increase. But you’ll also need to take that calculation with a grain of salt for one big reason.

A smaller COLA is likely in store

At the start of 2024, Social Security benefits got a 3.2% COLA. Next year’s raise is looking smaller, though, with estimates calling for a 2.5% raise in 2025 based on inflation data for July and August.

Meanwhile, the average retired worker on Social Security today gets about $1,920 per month. If that 2.5% COLA estimate winds up being correct, it’ll translate into an extra $48 a month for the typical Social Security recipient in 2025. But before you get too set on seeing your monthly income rise by $48, realize that there’s a wild card factor you’ll need to account for.

Will an increase in Medicare Part B eat into your Social Security COLA?

Seniors who are enrolled in Social Security and Medicare at the same time have their Part B premiums deducted off the bat from their monthly benefits. In 2024, the cost of Medicare Part B rose by $9.80 from 2023.

At this point, Medicare hasn’t announced what its standard 2025 monthly Part B premium will be. But if the increase is similar, it’ll shave about $10 off of next year’s Social Security COLA, bringing the average monthly check up by only $38 instead of $48.

Furthermore, Medicare may not be in a position to announce an official Part B premium until after October 10. So while you might get some helpful information from the SSA that day, you might still have to wait a bit to see how much your monthly benefit will actually increase.

There’s good news in all of this

You may not love the idea of a mere 2.5% Social Security COLA in 2025. And you might downright hate the idea of your Medicare premium costs rising to the point where your COLA is whittled down.

But do remember that the reason behind that 2.5% COLA — and not a larger increase — is cooling inflation. And a slower pace of inflation could result in you getting more buying power out of your monthly Social Security benefits — even once you account for an increase in the cost of Medicare Part B.

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