Social Security’s COLA seen as lower in 2025
By Jessica Hall
The Social Security cost-of-living adjustment for 2025 could be 2.4%, compared to a 3.2% increase this year, according to an analysis by the Senior Citizens League.
COLA is calculated based on the CPI-W, which more heavily weighs costs for transportation, food, apparel and other expenses that would be bought by urban non-retirees.
In January, the Senior Citizens League forecast the COLA would be 1.4%, and in February the forecast was raised to 1.75%. The estimate for 2025’s COLA will likely change as the year progresses. The official announcement for next year’s COLA is not expected until October.
Shelter, medical, and transportation prices remain higher than overall inflation rate, the Senior Citizens League said.
The average COLA over the last 20 years has been about 2.6%, according to the Senior Citizens League. COLA is a benefit adjustment that reflects inflation - it’s not a raise - but it still can be a boost for the roughly 67 million Social Security beneficiaries.
The trust fund that backs Social Security will be insolvent by 2033 - which means that if nothing is done to bolster it, benefits for current and future recipients will be slashed by 23%.
The Social Security COLA for 2024 increased the average retiree benefit by $59 per month, but how well does it compare with the dollar amounts that seniors report their household budgets increased in 2023?
According to a new survey by the Senior Citizens League, 93% of survey respondents say their household expenses increased by more than $59 per month for 2023. A total of 43% reported their household expenses rose more than $185 per month in 2023.