2025 social security cola increase : As inflation cools, the projected cost-of-living adjustment (COLA) for Social Security in 2025 is expected to be the smallest since 2021, potentially bringing modest relief to millions of beneficiaries. According to The Senior Citizens League (TSCL), the COLA is estimated to increase by 2.5%, a notable dip from the 3.2% adjustment seen in 2024.
How the 2025 COLA is Determined
The Social Security COLA is calculated annually to help beneficiaries maintain their purchasing power in the face of inflation. This adjustment is based on the Consumer Price Index (CPI), as reported by the Bureau of Labor Statistics (BLS), for the third quarter (July through September) each year. With inflation holding steady at 2.5% year-over-year in August 2024, projections indicate a modest COLA for the coming year.
TSCL estimates that the 2.5% increase would boost the average Social Security monthly benefit of $1,920 by an additional $48. This updated benefit amount will take effect starting January 2025, when the first Social Security checks are distributed under the new COLA.
How Does the 2025 COLA Compare to Previous Years?
The 2.5% COLA projection for 2025 may seem small compared to the 3.2% increase in 2024, but it aligns closely with the 20-year historical average of 2.6%. In recent years, COLAs have been higher due to elevated inflation, but as inflation begins to stabilize, smaller adjustments are becoming the norm again.
The Financial Strain on Seniors
Even with the projected increase, many seniors face ongoing financial struggles. TSCL’s 2024 Retirement Survey revealed that 65% of seniors now have monthly expenses of at least $2,000, up from 55% in 2023. Furthermore, more retirees are reporting higher monthly expenses, with some seniors spending $4,000 to $6,000 per month, leaving fewer able to live on $1,000 or less.
“Ensuring that seniors have enough to feed and house themselves with dignity is a major reason why we advocate for a minimum COLA of 3%,” said Shannon Benton, executive director of TSCL. This is particularly important as about two-thirds of seniors rely on Social Security for more than half of their monthly income, and 28% depend on it entirely.
What’s Next for Social Security?
The official 2025 Social Security COLA will be announced by the Social Security Administration (SSA) in mid-October 2024, following the release of September inflation data from the Labor Department. As seniors await this official figure, many are grappling with rising living costs and concerns about future financial security.
With nearly 80% of seniors reporting increased monthly budgets for essential items, the projected 2.5% COLA may not be enough to alleviate the financial strain many are feeling. For now, seniors and advocates alike continue to push for meaningful reforms to ensure that Social Security remains a vital safety net.
Stay tuned for the official COLA announcement and more updates on how Social Security will evolve in 2025 and beyond.
