The 2025 cost-of-living adjustments (COLAs) have been officially announced by the Social Security Administration (SSA) and federal retirement systems such as the Federal Employees Retirement System and the Civil Service Retirement System .
These adjustments help protect retirees’ benefits from inflation, ensuring their purchasing power remains intact despite rising costs. Here’s a breakdown of the 2025 COLA and what they mean for beneficiaries.
2025 COLA Announcements
In 2025, Social Security, FERS, and CSRS retirees will see a slight increase in their monthly payments. Here’s the breakdown:
| System | 2025 COLA |
|---|---|
| Social Security | 2.5% |
| FERS | 2% |
| CSRS | 2.5% |
Social Security (SSA)
The 2025 COLA for Social Security beneficiaries is 2.5%, slightly lower than the previous year’s increase of 3.2%.
This adjustment will provide retirees an average monthly increase of around $50. The increase will begin with payments in January 2025 and benefit nearly 72 million Americans.
FERS
For those under the Federal Employees Retirement System (FERS), the COLA for 2025 is 2%, down from 2.2% in 2024. While the FERS COLA is slightly lower than Social
Security’s and CSRS’s adjustments, it still helps federal retirees keep up with inflation. FERS retirees typically receive a lower COLA because they also benefit from Social Security and their Thrift Savings Plans (TSP) contributions.
CSRS
Federal retirees under the Civil Service Retirement System (CSRS) will see a 2.5% increase in 2025.
Although lower than the previous year’s 3.2%, it’s a significant boost. CSRS retirees do not receive Social Security, which explains why their COLAs tend to be higher than FERS retirees.
How Are COLAs Calculated?
The CPI-W index is used to measure inflation from the third quarter of the prior year to the third place quarter of the current year in order to compute COLAs.
The change in CPI-W determines the percentage increase in benefits. For 2025, inflation measured a 2.5% increase, leading to these adjustments.
Implications for Retirees
While a 2.5% increase helps cushion the effects of inflation, it’s smaller than the 2023 COLA, which was historically high due to soaring inflation.
Beneficiaries will notice the changes in their checks starting in January 2025, and those who have a “my Social Security” account can view their new benefit amounts online in December 2024.
Conclusion
The 2025 COLAs for Social Security, FERS, and CSRS give retirees a small increase in their payments, which helps them deal with rising prices.
The raises are smaller than in previous years, but they are still very important for keeping retirees’ finances stable in a world where the economy is changing. In December, you’ll find out how much your new benefits are, so plan ahead for 2025!
