The Social Security Administration normally announces annual cost of living adjustments (COLAs) in mid-October, but one organization predicts they will be lower in 2025 than in previous years. On April 10, the Senior Citizens League, a nonpartisan senior citizens group, presented a 2.6% COLA estimate for 2025.
The final figure, which is determined by the federal government, and the estimations made by the Senior Citizens League are dependent on inflation rates, which have decreased since the country’s economy recovered from the global coronavirus (COVID-19) pandemic. Although there has been an increase in inflation from The Senior Citizens League’s February COLA forecast of 1.75%, Shannon Benton, the organization’s executive director, stated that more work has to be done to assist the country’s senior citizens.
How is the Social Security COLA calculated?
By comparing the increase in the CPI-W for the third quarter of this year to the third quarter of last year, the Social Security Administration determines the new COLA. Organizations like the Senior Citizens League use data from the Consumer Price Index for July and August, together with estimates for September, to assist them anticipate the COLA. Millions of Americans rely on Social Security benefits as their only source of income; in June 2024, 72.4 million people were expected to be receiving benefits.
Although COLA projections are a useful tool for forecasting future costs, they do not provide a complete picture. Most Medicare Part B recipients have had their regular premium immediately removed from their benefit checks; this amount is expected to increase again in the upcoming year.
What is Social Security COLA?
For more than 71 million Americans, including retirees, veterans, and their families, Social Security benefits are essential. Introduced in 1973, the Cost-of-Living Adjustment (COLA) was designed to assist these benefits stay up with inflation. The annual adjustment guarantees the value of Social Security benefits. The COLA rise is 3.2% for 2024. Due to this adjustment, Social Security benefits have mainly been able to withstand rising expenditures.
