Social Security COLA 2025 Predictions Ahead of Decision
According to News Week, With just two weeks remaining until the announcement of the 2025 Social Security cost-of-living adjustment (COLA), experts are weighing in on what seniors can expect and the factors influencing this year’s adjustment.
Social Security benefits are adjusted annually based on the COLA, which aims to reflect inflation levels from the previous year, ensuring that seniors can maintain their purchasing power.
Expected COLA for 2025
While this year’s COLA was 3.2%, analysts predict a decline for 2025. The Senior Citizens League has recently revised its estimate, now forecasting a 2.5% increase, down from a prior prediction of 2.57%. This adjustment would translate to an additional $48 on average for seniors, raising the monthly benefit to approximately $1,968.
Kevin Thompson, finance expert and CEO of 9i Capital Group, echoed this estimate, attributing the lower COLA to the recent trends in inflation. “The COLA is tied to inflationary changes, so as the rate of inflation decreases, so does the COLA,” Thompson explained. He noted that this would represent the smallest COLA increase since 2021, when it was just 1.3%.
Potential for a Lower Adjustment
Some analysts suggest that the COLA might be even lower than 2.5%, which could come as a surprise to many seniors reliant on these benefits. Joseph Patrick Roop, president of Belmont Capital Advisors, expects the COLA to fall between 2.1% and 2.5%, more in line with historical trends. He cautioned that while inflation may seem high in some areas, particularly at grocery stores and universities, rising Medicare premiums are a significant factor eroding the real value of Social Security benefits. Part B premiums are projected to rise by 7.42%, and Part D by 6.73%.
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Financial Relief Amid Rising Costs
Michael Ryan, founder of michaelryanmoney.com, estimates the COLA will range from 2.3% to 2.7%. While he anticipates some financial relief from the upcoming adjustment, Ryan believes it won’t fully compensate for rising costs associated with Medicare, rent, and groceries. “Seniors will need to allocate a larger portion of their benefits to healthcare costs,” he said, highlighting that even as food inflation has moderated, prices remain high and the COLA will only partially offset these increased expenses.
This financial squeeze may prompt many seniors to seek part-time work or find ways to monetize their hobbies.
Key Announcement Date
The Social Security Administration is set to officially announce the 2025 COLA on October 10, once it gathers the latest inflation data. Although the COLA aims to protect seniors against inflation, many feel it does not sufficiently raise their benefits to meet their needs.
According to a survey by the Senior Citizens League, around 80% of retirees expressed a desire for better inflation protection. Some have suggested adopting a consumer price index for the elderly instead of the current index used, which reflects urban wage earners and clerical workers. However, such a change is unlikely before the 2025 COLA is finalized.
