The Senior Citizens League is forecasting changes to the Social Security cost-of-living adjustment (COLA) in 2025, potentially less than expected due to reduced inflation and changing economic conditions. This may pose challenges for seniors depending heavily on social security income.
Despite the average COLA increase being 2.3% over the past decade, the last two years saw significant changes. Last year recorded an outstanding 8.7% rise, and this year, a more modest 3.2% increase, suggesting some stabilization after the prior year’s surge.
Yet, even with these figures, social security recipients face financial issues. Rising housing, healthcare, and necessities costs coupled with the ongoing COVID-19 pandemic have placed many Social Security beneficiaries in unstable positions. Therefore, there are calls for necessary adjustments in the social security system.
The 2024 Retirement Confidence Survey revealed disturbing data, with 56% of retirees expecting to make significant spending cuts due to rising inflation rates. A substantial 26% are worried about affording a comfortable lifestyle post-retirement. And 68% of respondents are not confident about leaving an inheritance, reflecting serious concerns about their financial situation.
Currently, the Senior Citizens League predicts the 2025 COLA will be roughly 2.6%, the smallest in four years.
Predicted COLA changes for social security
However, the official figures from the Social Security Administration have yet to be announced. Thus, seniors are encouraged to prepare for any possible changes. A continuation of lobbying efforts by advocacy groups such as The Senior Citizens League aims to help seniors offset growing living costs.
The COLA is calculated by comparing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for Q3 of the current year with that of the preceding year. This percentage increase becomes the basis for the COLA of the succeeding year, ensuring that wages and salaries keep pace with the rising cost of living.
A 2.6% COLA in 2025 would result in an average monthly increase of approximately $50 for retirees. However, these numbers may change. This year, the Senior Citizens League has made three upward adjustments to the COLA forecast, highlighting the many factors that could influence the final percentage. Thus, retirees should plan their finances and monitor updates from the Social Security Administration and the Senior Citizens League.
