The Most Important Day Of The Year For Social Security Is Coming

For Americans who receive Social Security, the term COLA likely brings up another thought other than a fizzy beverage. An acronym for cost-of-living adjustment, COLA enables Social Security and Supplemental Security Income (SSI) benefits to keep pace with inflation. For example, in 2024, the COLA was 3.2%, but with U.S. inflation cooling (in particular, in July and August), the most recent forecast for 2025 is a COLA rate of 2.5%.

Yet, we won't know for sure about the 2025 COLA increase until October 10, when the Department of Labor releases September data for the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a subset of the Consumer Price Index for All Urban Consumers and representing approximately 30% of the total U.S. population.

Once the Social Security Administration has this particular data, it'll then finalize the new COLA. For this reason, the day the Labor Department (specifically, the Bureau of Labor Statistics) publishes September's CPI-W figures is considered to be the most important day for Social Security, as only then can the next COLA rate be determined.

On September 11, 2024, the Bureau of Labor Statistics reported that inflation rose 2.5% year-over-year for August, down 0.4% from July. Based on this, The Senior Citizens League, a nonpartisan advocacy group for older Americans, reported that its COLA model was predicting a COLA rate of 2.5% for 2025, down around 0.1% from its prediction a month earlier. The group says that at 2.5%, the benefits increase for a retired individual receiving $1,920 a month in Social Security payments would be $48 (or $576 for the year total).

A 2.5% COLA rate would be the lowest since 2021, however much closer to the historical norm of about 2.6% over the last 20 years. Consider, in 2020, the COLA rate was 1.3% and in 2019, 1.6%. As for why analysts are making this prediction, it's because they already have much of the formula that determines what the COLA will be. Per the Social Security Act, the Social Security Administration must use the consumer price index to calculate COLA — specifically, it compares the third quarters (July, August, September) of the CPI-W of the current year and the year prior. The difference is the COLA increase.

At this point, all that remains is for the Social Security Administration to get September's CPI-W. Note that for August and July, the CPI-W rose by 2.4%, according to the Bureau of Labor Statistics' consumer price index summaries. The CPI-W for the third quarter of 2023 was 299.899 for July, 301.551 for August, and 302.257 for September. For 2024, the CPI-W for July was 308.501 and 308.640 for August.

In addition to the day the Labor Department releases September's CPI-W data (which, again, is October 10 for this year), another important date for Social Security beneficiaries and Supplemental Security Income recipients arrives in December. In December, the Social Security Administration sends out COLA notices in the mail (or online in the Message Center of your my Social Security account). These notices break down how the COLA rate increase will change your monthly benefit amount in the new year. (For curious readers, here's the salary you'd need to make to receive the maximum Social Security benefit in 2024.)

A few other Social Security dates to circle on the calendar include the days checks get sent out, which is on the second, third, or fourth Wednesday of every month, depending on your birth date. As for SSI recipients, typically, these checks are sent on the first of the month; however, when that day falls on a Saturday or Sunday, then it gets sent the Friday before. This is why sometimes, like for September 2024, where September 1 fell on a Sunday (and, by the way, before Labor Day), SSI recipients will receive two checks in one month (August) and no check for the next (September).