With 2024 halfway through, experts are already speculating about the cost-of-living adjustment (COLA) that Social Security recipients will receive in 2025. The official announcement is not due until October, but early predictions indicate a smaller increase compared to recent years.
Smaller COLA Expected in 2025
The Senior Citizens League estimates a 2.57% increase for next year, significantly lower than the 3.2% raise in 2024 and even lower than the 8.7% and 5.9% increases in 2023 and 2022, respectively. While this news may disappoint retirees, it is essential to prepare for a smaller adjustment in the upcoming year.
Why the Wait for 2025's COLA
The COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data from the third quarter. Although predictions are made using data from the first half of the year, the final numbers are crucial for determining the actual raise. While uncertainties remain regarding the exact percentage, trends suggest a smaller COLA due to more modest price increases in 2024.
Experts caution that while fluctuations in the third-quarter data could still impact the final adjustment, a drastic change is unlikely given the current stable inflation rates. Retirees are advised to manage their expectations and prepare for a reduced 2025 COLA compared to recent years.