How to Get a Bigger Boost with the COLA Increase: The Cost of Living Adjustment (COLA) for 2025 is projected to be around 3.0%, offering much-needed financial support to Social Security and Supplemental Security Income (SSI) recipients as they adjust to inflation. This guide will help you understand how COLA works, who qualifies, and how to maximize your benefits to secure a brighter financial future.
How to Get a Bigger Boost with the COLA Increase
COLA increases are a lifeline for millions of Americans, ensuring their Social Security and SSI benefits keep up with inflation. Recent years have seen larger COLA adjustments due to rising inflation, giving recipients a financial boost. However, you might be surprised to learn that there are strategies to maximize your COLA benefits and even receive a higher-than-average boost.
Here, we’ll explain the steps you can take to ensure you’re making the most of these annual adjustments.
Understanding the COLA Increase
The Cost of Living Adjustment (COLA) is an annual adjustment applied to Social Security and SSI benefits. Its purpose is to ensure recipients’ purchasing power remains stable in the face of inflation. The adjustment is determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Each year, the Social Security Administration (SSA) evaluates inflation from the third quarter of the previous year to the third quarter of the current year. If inflation rises, the COLA increase is applied, boosting monthly benefits accordingly.
For instance, Social Security recipients saw a historic 8.7% COLA increase in 2023—the highest in over four decades. In contrast, the COLA increase for 2025 is expected to be a more moderate 3.0%, reflecting current inflation trends.
Who Is Eligible for the COLA Increase?
If you’re already receiving Social Security or SSI benefits, you are automatically eligible for the COLA adjustment. Here are the primary categories of recipients:
- Retirees: Individuals receiving Social Security retirement benefits will see their payments adjusted annually based on COLA.
- Disabled Individuals: Those receiving Social Security Disability Insurance (SSDI) or SSI will benefit from the adjustment, which helps cover increased costs of living.
- Survivors: Family members of deceased workers who receive survivor benefits—such as widows, widowers, or children—will also see a boost.
- SSI Recipients: Supplemental Security Income beneficiaries, who often rely on this assistance for basic living expenses, are eligible for COLA increases.
How to Maximize Your COLA Increase
Although you can’t control the COLA percentage itself, you can take steps to ensure your benefits—and by extension, your COLA boost—are as high as possible:
1. Verify the Accuracy of Your Earnings Record
Your Social Security benefits are calculated based on your lifetime earnings record. Any errors or missing income in this record can result in lower benefits and a smaller COLA adjustment.
Tip: Create a My Social Security account on the SSA’s official website to regularly check your earnings record. Report any discrepancies to the SSA immediately to ensure your benefits are calculated correctly.
2. Time Your Retirement Wisely
The age at which you begin claiming Social Security has a significant impact on your benefit amount.
- Full Retirement Age (FRA): Claiming benefits at your FRA (typically 66 or 67) ensures you receive 100% of your eligible monthly benefit.
- Delayed Retirement: Waiting to claim benefits past your FRA—up to age 70—can increase your benefit by 8% per year, and the COLA will be applied to this higher amount.
Delaying your retirement is one of the most effective ways to maximize both your base benefit and your annual COLA increases.
3. Maximize Earnings During Your Career
Your Social Security benefit is based on your highest 35 years of earnings. Boosting your income during your working years directly impacts your future benefits.
Tip: Aim to reach the maximum taxable earnings threshold for Social Security (set at $160,200 in 2023). Higher lifetime earnings mean higher monthly benefits, and thus, larger COLA adjustments.
4. Maintain SSI Eligibility by Monitoring Income and Assets
For SSI recipients, eligibility and benefit amounts depend on income and resources. If your income or assets exceed the limits, your benefits (and COLA adjustments) may be reduced.
- Income Limit for SSI: $1,134 per month for individuals and $1,920 for couples in 2025.
- Resource Limit for SSI: $2,000 for individuals and $3,000 for couples.
Tip: Regularly review your income and assets, and report changes to the SSA promptly to avoid disruptions in benefits.
Key Takeaways
| Topic | Details |
|---|---|
| What is COLA? | An annual adjustment to Social Security and SSI benefits designed to match inflation. |
| 2025 COLA Increase | Expected to be 3.0%, based on current inflation trends. |
| Who is eligible? | Retirees, disabled individuals, survivors, and SSI recipients. |
| Maximization Strategies | Check your earnings record, delay retirement, maximize career earnings, and monitor income/assets for SSI eligibility. |
| COLA Impact | Affects monthly benefits for retirees, survivors, and individuals with disabilities, helping them keep pace with inflation. |
FAQ
- How often are COLA increases applied?
COLA adjustments occur once a year, usually starting in January, based on inflation data from the previous year. - Can I receive a higher-than-average COLA adjustment?
While the COLA percentage applies equally to all recipients, maximizing your earnings and delaying your claim can increase the dollar amount of your COLA boost. - Will COLA fully offset inflation?
COLA is designed to help benefits keep pace with inflation, but in some cases, it may not fully cover rising living costs. - What is the projected COLA increase for 2025?
Based on current trends, the 2025 COLA increase is expected to be around 3.0%.