Experts Try to Predict 2025 Social Security COLA
Social Security payments are not static. Benefit amounts can increase to keep up with rising costs and inflation. This is called the cost-of-living adjustment (COLA).
As Yahoo! Finance explains, the Social Security Administration (SSA) calculates the annual COLA using inflation data from the third quarter (Q3), which runs July 1 through September 30. The official COLA announcement will be made in mid-October.
To calculate the Social Security COLA, the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for Q3 against the average for the same period in the prior year. The percentage increase (if any) becomes the COLA for the next year.
While it is too soon to tell exactly what the 2025 COLA will be, experts are already crunching numbers trying to come up with a best guess. The article explains that many observers are watching the monthly inflation reports from the Bureau of Labor Statistics.
Right now, some experts are forecasting the 2025 COLA will be 2.6 percent. That would be bad news for struggling seniors, as it is a smaller increase than the 3.2 percent COLA Social Security recipients received this year and less than one-third of the 8.7 percent adjustment they received in 2023.
New COLA Calculator
One sure way to help retirees combat the higher cost of living would be to use a different COLA calculator. Basing it on the CPI-W does a disservice to seniors. Senior advocates such as The Seniors Trust believe the Consumer Price Index for Americans 62 years of age and older (CPI-E) would be a better formula, as more accurately reflects the costs incurred by older adults, especially related to healthcare and housing.
The Social Security Expansion Act calls for adopting the CPI-E. Not only would this provide Social Security recipients with a fairer COLA, but this landmark piece of legislation also provides across-the-board benefits boost of about $2,400 per year and long-term Social Security solvency.
