In 2023, seniors and other individuals who were Social Security recipients saw their benefits increase by 8.7%, when one of the most important cost-of-living adjustments, or COLA, came amid rushing inflation. This year’s COLA, however, was much lower, reaching only 3.2%.
While, the Social Security COLA estimates for next year are being even lower so far, recently, the non-partisan Senior Citizens League made a projection that the COLA for the year 2025 would be 2.66%.
Of course, it is not known for sure how much the COLA will amount to next year, until the month of October, this is because the COLAS are based on data from the third quarter of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Since the third quarter of the year has not yet arrived, of course it is a bit hasty to make assumptions about a COLA for the year 2025, by the same subject that is projecting 2.66% is really only an assumption, although it is true it is based on the current inflation date.
Why a Smaller COLA Increase Are Expected in 2025
If you have already been receiving Social Security for a while and liked to see that your benefits grew by 8.7% at the beginning of the previous year, you may be asking the question, if such a big increase, will it happen again at some point? The answer is, it could happen, another 8.7% QUEUE is possible
since colas are linked to inflation, it is more than feasible that at some point inflation will start to skyrocket, which will lead to a gigantic increase in Social Security. We could even see a COLA widely exceeding 8.7% in the future, depending on economic conditions.
In fact, 8.7% is not the biggest COLA Social Security has ever seen. In the early 1980s, when inflation was really out of control, Social Security recipients received three consecutive COLAS for amounts of 9.9%, 14.3% and 11.2%, respectively.
But in the context of more recent years, that 8.7% COLA definitely stands out. In 2022, Social Security beneficiaries saw their payments increase by 5.9%. But the previous year, 2021, they got only a 1.3% increase. And between 2010 and 2019, there were three years during which Social Security benefits did not get any COLA.
Actually, You Don’t Want a Massive COLA, Trust Me
If you are a salaried employee, a big raise is something you absolutely want. But if you are a Social Security beneficiary, believe it or not, you really shouldn’t expect a giant QUEUE year after year. Large colas are simply the result of skyrocketing inflation.
So while your monthly Social Security checks may increase, you may also be paying a lot more when doing your grocery shopping and just about everywhere.
To put it another way, if anything, the big Social Security TAILS just balance out an inflation faster than the typical one.
In general, they do not help older people to have better purchasing power, only to have an adjustment in favor of increasing the cost of living.
That’s why it’s really important to retire with more than just Social Security.
If you have some savings, that could be a great help to get the most out of it, in addition to your monthly benefits, you may not have the need to worry so much when the prices of food and utilities present some increase.
Overall, there’s a chance of seeing another 8.7% Social Security COLA, or one even higher than that, but it’s also not something you should expect.
