The 2025 Social Security cost of living adjustment (COLA) is projected to be between 2.5% and 3%, based on new inflation data, these estimates fall short of the current inflation rate, which raising concerns that the COLA may not fully reflect retirees’ actual living expenses, particularly in areas such as food, housing, and medical expenses.
The final COLA for 2025 will be determined this October, and current projections mark a vitally important gap between inflation and the proposed adjustment, the latest projections for the Social Security Cost of Living Adjustment have been discussed for 2025, and how cooling inflation could affect it.
The New Data Estimates
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 increase will look like for next year, we already know, COLA is a really significant 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. Based on inflation data that was recently released by the federal government in May, the Social Security COLA for 2025 could range between approximately 2.5 and 3%, so the Senior Citizens League projects that 2.5% COLA.
Forecasts From External Analysts
Other external analysts, such as Mary Johnson, have made forecasts of 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, 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, remain meeting below inflation.
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 measure up because their actual spending is greater than the figure the SSA is trying to adjust.
