Social Security benefits provide tens of millions of vulnerable Americans — including retirees, disabled individuals, and survivors — with a stable source of income from each month to the next. The agency tasked with ensuring that these vulnerable individuals receive their monthly benefits promptly without any delays is the Social Security Administration (SSA).
Over the course of the year thus far, the agency and the program has been faced with several changes, some more major than others. Some of the more notable changes early on in the year include the Social Security Fairness Act being officially signed into law in January, as well as the cutbacks enacted by President Donald Trump’s Department of Government Efficiency (DOGE) whereby around 7,000 employees were let go, and another 1,000 were reassigned. Following this, Frank Bisignano had also been officially appointed as the new Commissioner of the Social Security Administration in May and overseeing the process of claims adjustments due to the Social Security Fairness Act had been one of his first major tasks.
Another change consistently faced by beneficiaries of the Social Security program is the annual Cost of Living Adjustment that causes benefit amounts to increase slightly in order to account for the effects of inflation. This is known as the COLA and the agency will soon be announcing the percentage by which benefits will increase for next year in October. Beneficiaries of the program who are also currently working may notice that they owe more in taxes soon due to changes to the wage base limit as well. Here is everything you need to know.
Upcoming Social Security Cost of Living Adjustment
Social Security benefits are a predetermined, fixed income and as such, in the face of inflation, the households of beneficiaries can potentially suffer greatly if they are relying solely on the monthly benefits to cover all or most of their expenses. In order to aid this and allow for the monthly benefit to retain its buying power at least to some extent, the SSA adjusts all benefit amounts according to the current rate of inflation.
The measure of inflation that is used is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) which is released monthly by the Bureau of Labor Statistics. The third quarter CPI-W data for the current year is measured against the same data for the previous year and if there is an increase, this percentage figure becomes the next year’s COLA.
For 2025, the COLA came in at 2.5% and as a result, all benefit amounts were increased by this figure in January. Since we are currently in the third quarter of the year, the projections for the upcoming COLA announcement are likely becoming more accurate. The Senior Citizen’s League has projected a COLA of 2.6% based on June data, whilst independent Social Security and Medicare policy analyst Mary Johnson estimates a COLA of 2.7%.
However, due to the expected increase in Medicare Part B premiums, the COLA adjustment may get lost in new additional costs for many seniors.
“It’s not uncommon for Part B premiums to consume much or even all of the annual COLA, leaving little extra to cover other big cost increases,” Johnson wrote previously.
Working as a beneficiary
If you are collecting benefits but are also still working, your benefit amounts are often reduced if you have not yet reached your Full Retirement Age. For 2025, the limit is $23,400 and $1 is lost for every $2 earned beyond the threshold, assuming you will not reach your Full Retirement Age for the full year. If, however, you will be reaching your Full Retirement Age in the year, the limit is then $62,160 and for every $3 earned above this threshold, you lose $1.
The good news is that these limits are set to increase in the upcoming year meaning that if retirees are strategic about it, they can better maximize their total income. Parallel to this, with regards to the current workforce, the maximum taxable earnings limit is also set to increase for 2026. In 2025, the wage base limit stands at $176,100.