In some projections it has been seen that the Social Security cost of living adjustment (COLA) of the year 2025 will be between 2.5% and 3%, according to the most recent inflation data, these estimates do not reach the current inflation rate, which causes some concern that the COLA does not fully reflect the real living expenses of retirees, particularly in areas such as food, housing and medical expenses.
The final COLA for the year 2025 will be determined in the month of October, and the current projections mark an important gap between inflation and the proposed adjustment, the latest projections for the COLA increase of next year 2025 have been discussed, and how the cooling of inflation could bring it to affect.
Inflation Data Suggests COLA 2025 May Leave Retirees in Financial Crisis
With the publication of new data regarding inflation, a revision of the estimates for the COLA for next year was made, and it is very important to understand what this means for the beneficiaries.
Looking at the data of how COLA will look like for the next year, we already know, COLA is a number actually relevant for all those people who are retired, and as has been talked about in the past, this is a moving target, since all these are just estimates.
There is a need to manifest it from the beginning, but it is actually significant to see where these estimates are, because they come from professionals in this space who make a living from this, and it has a great impact on the quality of life of retirees.
Retirees at Risk: COLA 2025 Forecasts
According to the inflation data that was recently published by the federal government in the month of May, the Social Security COLA for the year 2025 could range between about 2.5 and 3%, then, the Senior Citizens League projects that 2.5% COLA.
Other external analysts have made forecasts of a slightly higher COLA, of about 3%. But we do see the information that came out recently from the BLS about the Consumer Price Index, which had an increase of 3.3% in the last 12 months.
Indeed, both estimates, even with Mary Johnson’s higher estimate of a 3% COLA, are still below inflation.
Inflation Could Leave You Behind
And as it has been analyzed in the past, the COLA of the year 2024, most retirees have the feeling that that was not enough to match the salary with inflation given the unique combination of products that retirees face.
There’s the senior consumer price index that relates more to food and healthcare, which is known to make up a larger percentage of retirees’ consumption patterns.
Therefore, the simple fact of making use of the broad-based CPI figure is often not a reflection of the reality of what retirees pay, that’s why we can see these gaps and people may feel that they are not up to par because their actual spending is higher than that of the figure that COLA is trying to adjust.
