Every year the Social Security Administration (SSA) conducts an assessment of how inflation has impacted the purchasing power of benefits distributed by the agency using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), this indicator tracks price changes for a basket of goods and services with some differences from the more general CPI for all urban consumers (CPI-U).
Those who have Social Security benefits, many of them have fixed incomes and suffer a lot when prices rise quickly, welcome the signs that inflation is slowing down, as commodity prices decrease, beneficiaries will see that their purchasing power is increasing.
However, it is still in we will see whether or not they will recover everything lost, in a survey recently conducted by The Senior Citizens League (TSCL) it was found that about 70 percent of the beneficiaries saw “household costs increased faster than the COLA last year.”
Predicting the 2025 COLA: What Should We Expect?
To calculate the cost of living adjustment, popularly known as COLA, the SSA takes the average CPI-W for the months of July, August and September of a specific year and makes a comparison of that figure with the figure recorded over the same period, the previous year.
In 2023, the three-month average was 301,236, and in May 2024 there was an increase to 307,811 or 2.1 percent, there is still room for the COLA to increase that will be applied to profits in 2025, but it is unlikely to reach the levels observed in 2023 or 2024.
When Will the Final Social Security COLA Be Announced?
The SCL makes a publication of a COLA forecast year after year, after the May CPI report of the BLS, the group decreased its projection, although at the beginning of spring, the SCL made the estimate that the COLA of 2025 would reach 2.66 percent, the researchers revised their estimates to 2.57 at the beginning of this month of June.
The SSA publishes the COLA in mid-October after the CPI report for the month of September has been published, the BLS plans to publish this year’s report on Thursday, October 10, as the CPI reports for the months included in the calculation are published, the forecasts will be more accurate, which will allow beneficiaries to prepare better for the possible increase that they will see applied to their benefits in the new year.
What Exactly Is a Cost of Living Adjustment (COLA)?
Colas are compensation increases intended to help employees maintain the value of their compensation in the face of inflation. These increases are not considered increases due to good job performance results, but should be considered in order to help employees maintain their purchasing power.
