Social Security cost of living adjustment likely higher this year
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The annual COLA increase is the smallest in recent years. Photo illustration: Kevin Dietsch/Getty Images
The Social Security cost of living adjustment, or COLA, for next year is trending toward 2.8%, slightly higher than in 2025.
Why it matters: The COLA is an annual raise for retirees who rely on Social Security — closely watched by the nation's seniors.
Where it stands: The Labor Department's Consumer Price Index report for August on Thursday showed that inflation accelerated for the fourth consecutive month, as tariffs weighed on prices.
- With this latest CPI report, we're now one month away from having all the numbers needed to calculate the raise that more than 72.5 million recipients of Social Security and Disability will get next year.
- The inflation adjustment is also used to calculate the wage cutoff above which Americans don't owe Social Security tax. Currently it's at $176,100.
By the numbers: The COLA is based on the change in CPI for wage earners — from the third quarter of 2024 through the third quarter of 2025.
- That number is at 2.8%. Last year's adjustment was 2.5%.
Between the lines: We're a long way away from the huge COLAs announced in 2021 (5.9%) and 2022 (8.7%), which means that inflation hasn't been as punishing in more recent years — though there are now signs it's reigniting.
The intrigue: A bigger raise would be most welcome. Seniors were the only age group to see their poverty rates increase last year, per Census data out earlier this week.
- The supplemental poverty rate for those 65 and older — which takes into account government benefits like Social Security, Medicare and Medicaid — increased to 15% in 2024, from 14.2% the previous year. It was flat for other age groups and even fell slightly for those under 18.
- The rate has been rising since 2021, as pandemic relief rolls off.
"The Census report just made it clear: Low-income seniors are falling behind," Claire Casey, president of the AARP Foundation, said in a statement.
Yes, but: The increase is a bit hard to interpret — as the government's new adjustments to poverty thresholds make the data slightly less useful this year, the Center on Budget and Policy Priorities notes.
What to watch: We won't know for sure what the COLA is until next month, when the September CPI comes out.
