The annual Social Security cost-of-living adjustment, or COLA, is an important feature of the program. Many retirees rely on the annual bump in benefits to help make ends meet and keep up with the rising costs of everyday life. Last year, Social Security increased benefits by 3.2%.

Social Security isn't the only government benefit that is affected by the COLA. Social Security Disability Insurance, Supplemental Security Income, Medicare, Supplemental Nutrition Assistance Program (including food stamps and other programs) all use COLA to account for inflation when setting benefits.

Current estimates are calling for a smaller Social Security COLA in 2025 than in 2024. On a positive note, cooling inflation should give retirees a fair amount of financial relief. Because of the way Social Security COLAs are calculated,