The Social Security cost of living adjustment (COLA) for the year 2025 is projected to be close to 2.5%, according to new inflation data, these estimates do not reach the inflation rate that exists today, which creates some concern that the COLA may not fully reflect retirees’ actual living expenses, particularly in areas such as food, housing, and medical expenses.
The final COLA increase for the year 2025 will be determined in just a few days, in the month of October, and the projections that have been made recently have marked a significant gap between inflation and the proposed adjustment, there have been some discussions about the latest projections for the 2025 Social Security annual increase, and how cooling inflation could affect it.
Estimates for the Social Security COLA 2025
With the publication of new data regarding inflation, a revision of the estimates for next year’s COLA was made and it is important to understand what this means for beneficiaries. Looking at the data of what COLA will look like for next year, we already know, COLA is a really transcendental number for all those retired people, and as has been talked about in the past, this is a moving target, since all of these are just estimates.
We felt the need to state this from the beginning, but it’s actually relevant to see where these estimates are, because they come from professionals in this space who make a living from this, and it has a huge impact on the quality of life of retirees. According to inflation data that was recently released by the federal government in May, the Social Security COLA for the year 2025 could be around 2.5%, so the Senior Citizens League projects that 2.5%.
Other outside analysts, such as Mary Johnson, have made forecasts for a slightly higher COLA, around 3%. But if we look at the information that recently came out from the BLS about the Consumer Price Index (CPI-W), 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.
Is the Projected COLA Enough for Beneficiaries?
And as has been analyzed in the past, the COLA for the year 2024, most retirees have the feeling that this 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, simply using the broad-based CPI figure is often not a reflection of the reality of what retirees pay, which is why we can see these gaps and people can feel that they are not falls short because their actual spending is higher than the figure COLA is trying to adjust.
Current Social Security Payments
Payments are variable based on several factors, including years worked, total Social Security taxes paid, and retirement age:
- Retired workers: about $1,907 monthly.
- Retired couples (filing a joint return): About $3,303 monthly.
- Survivor benefits: About $1,509.50 monthly.
- Spouses of retired workers: About $910 monthly.
- Children of retired workers: About $892.39 monthly.
- SSI beneficiaries (individuals): Fence of $943 monthly.
- SSI beneficiaries (couples): About $1,415 monthly.