crs_reports: 94-803

Congressional Research Service reports with summaries, authors, and topic classifications.

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id title publish_date update_date status content_type authors topics summary pdf_url html_url
94-803 Social Security: Cost-of-Living Adjustments 2025-01-15T05:00:00Z 2025-06-21T04:57:58Z Active Reports Tamar B. Breslauer, T. Lynn Sears Social Security To compensate for the effects of inflation, Social Security recipients usually receive an annual cost-of-living adjustment (COLA). According to parameters outlined in the Social Security Act (42 U.S.C. §415(i)), a 2.5% COLA is payable starting in January 2025. For a retired worker, the 2024 COLA will raise the estimated average monthly benefit amount received in January 2025 by $49 from $1,927 to $1,976 (after final rounding down to the nearest dollar). Social Security COLAs are based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), updated monthly by the Department of Labor’s Bureau of Labor Statistics (BLS). The COLA equals the growth, if any, in the index from the highest third calendar quarter average CPI-W recorded (typically, from the previous year) to the average CPI-W for the third calendar quarter of the current year. The COLA becomes effective in December of the current year and is payable in January of the following year. (Social Security payments always reflect the benefits due for the preceding month.) If there is no percentage increase in the CPI-W between the measuring periods, no COLA is payable. In other words, the Social Security COLA can never be negative, and benefit levels are not reduced, even during times of a decreasing price index. No COLA was payable in January 2010, January 2011, or in January 2016. The January 2025 COLA will also be applied to Supplemental Security Income (SSI) and railroad retirement “tier 1” benefits, among other changes in the Social Security program. Although COLAs under the federal Civil Service Retirement System (CSRS) and the federal military retirement program are not triggered directly by the Social Security COLA, these programs use the same measuring period and formula for computing their COLAs. https://www.congress.gov/crs_external_products/RS/PDF/94-803/94-803.41.pdf https://www.congress.gov/crs_external_products/RS/HTML/94-803.html

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