HELPING HAND: Exact date COLA will be announced and Americans are in for less Social Security in the new year

According to THE SUN, The Social Security cost-of-living adjustment (COLA) for 2025 is projected to be 2.5%, according to estimates from the Senior Citizens League (TSCL). This prediction is based on a decrease in consumer price data from 2.9% to 2.5%. The Social Security Administration (SSA) is expected to officially announce the COLA on October 10, and retirees are preparing for a potentially smaller increase in benefits compared to previous years.

A 2.5% COLA would translate to approximately a $48 monthly increase for the average retired worker, whose current benefit is about $1,920. While this adjustment is lower than the 3.2% increase granted in 2024, it is relatively close to the historical average. Over the past two decades, the COLA has averaged 2.6%, with considerable fluctuations. For example, 2023 saw an 8.7% boost—the highest since 1981—while years such as 2010, 2011, and 2016 had no adjustment.

Determining the COLA

By law, the annual COLA is determined based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Bureau of Labor Statistics calculates the average CPI-W for July, August, and September and compares it to the same period from the previous year. The percentage difference between these two periods becomes the COLA, which will be applied to checks starting in January 2025.

Rising Expenses for Seniors

As inflation continues to impact everyday costs, many older Americans are feeling financial pressure. According to TSCL’s 2024 Retirement Survey, 65% of seniors now report monthly expenses exceeding $2,000, a significant increase from 55% in 2023. More retirees are spending between $4,000 and $6,000 per month, while fewer can live on $1,000 or less.

The rising cost of living has predominantly affected essential expenses. Nearly 80% of seniors have reported increased spending on necessities such as food, housing, and prescription drugs over the past year. Additionally, 63% of seniors are concerned that their current income may soon fall short of covering these basic costs.

Advocacy for Higher COLA

Shannon Benton, Executive Director of TSCL, emphasized the importance of ensuring that seniors have sufficient financial resources. “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%,” Benton said.

TSCL’s research indicates that approximately two-thirds of seniors rely on Social Security for more than half of their monthly income, and 28% depend on it entirely. Even though last year’s 3.2% COLA increase provided some relief, it fell short of matching inflation across the broader economy. The substantial 8.7% COLA increase in 2023 was an anomaly driven by pandemic-related inflation spikes.

Looking Ahead

With the predicted 2.5% adjustment for 2025, many retirees might struggle as this increase is unlikely to fully offset the rising cost of living. In related news, TSCL’s findings also suggest that older Americans are allocating more of their income to cover basic expenses.

Additionally, beneficiaries are warned about Social Security scams claiming that Social Security numbers will be revoked.