Millions of Americans who rely on Social Security benefits will continue to see higher monthly payments in August 2025, thanks to the cost-of-living adjustment (COLA) implemented earlier this year. While not as large as the historic COLA hikes of recent years, this increase is an important effort to keep up with rising inflation and living expenses.
Understanding the 3.2% COLA Increase
The Social Security Administration (SSA) confirmed that a 3.2% COLA took effect in January 2025. This annual adjustment helps Social Security and Supplemental Security Income (SSI) recipients maintain their purchasing power as prices rise, particularly in housing, healthcare, and daily living costs.
The 3.2% increase was calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2023. While this adjustment is much smaller than the 8.7% increase in 2023, it still provides necessary relief for retirees and other beneficiaries coping with ongoing cost increases.
What to Expect in Your August 2025 Payment
With the 3.2% COLA, the average Social Security retirement benefit has increased by more than $50 per month, starting in January 2025. For example, the average benefit for retired workers rose from approximately $1,848 to $1,907, as estimated by the SSA. This increase will still be reflected in the August 2025 payments.
The COLA extends beyond retired workers, benefiting disabled individuals, survivors, and SSI recipients, who will also see proportional increases in their monthly payments. The SSA confirmed that “Social Security and SSI benefits will increase by 3.2 percent” in 2025.
Medicare Premiums Adjusted Alongside COLA
Along with the Social Security COLA, Medicare premiums were adjusted for 2025. The standard monthly premium for Medicare Part B rose by $9.80, bringing the total to $174.70 for the year. For some beneficiaries, this increase in premiums may offset some of the gains from the COLA, especially if their Medicare premiums are deducted directly from their Social Security benefits.
While some individuals may not see the full 3.2% increase due to these deductions, most beneficiaries will still experience a net increase in their monthly income, offering some relief for those living on fixed incomes.
Looking Ahead: The 2026 COLA
Experts are already turning their attention to inflation trends to predict the 2026 COLA, though it is still too early to make precise estimates. The SSA will announce the 2026 COLA in October, based on inflation data collected from July through September 2025. In the meantime, beneficiaries can expect their August 2025 payments to remain elevated due to the COLA increase made earlier in the year.
For now, the 3.2% COLA increase in 2025 provides a modest but welcome boost to Social Security recipients. While it may not fully compensate for rising costs, it offers some breathing room for retirees, disabled individuals, and other beneficiaries who rely on fixed incomes. However, with inflation continuing to affect everyday expenses, future COLA adjustments will be crucial to ensuring that Social Security payments keep pace with the cost of living.
