In its announcement, experts expect the COLA for 2025 to come in at an increase of around 2.5%. That figure, while a slight help for beneficiaries, brings a continued problem of seniors fighting against today’s living reality. It is expected to be announced on October 10, 2024, based on inflation data taken from the Consumer Price Index for Urban Wage Earners and Clerical Workers-known as the CPI-W.
History of COLA adjustments
The COLA mechanism was created in 1973 to prevent erosion of purchasing power of the Social Security benefits through inflation. Over the years, COLA adjustments have varied significantly:
- Very high increases: The highest increase was in the year 1980 when a tremendous rise of 14.3% was given to beneficiaries.
- Recent trends: Changes have seesawed over recent years according to the economic circumstances. For instance, beneficiaries experienced an increase of 8.7% in 2023, reflecting the high inflation rates witnessed as a result of the COVID-19 pandemic.
In contrast, however, the COLA for 2024 reached a more modest level of 3.2%.
Historical fluctuation indicates that economic elements form the very basis of changes to Social Security benefits.
Current predictions for 2025
According to the COLA estimate by The Senior Citizens League, it is expected in 2025 at approximately 2.5%. The forecast is due to new consumer price data showing a decline from prior inflation levels. Once confirmed, the adjustment would increase the average monthly benefit for retired workers from $1,920 to roughly $1,968, merely a rise of $48.
Professionals say that while a 2.5 percent increase is better than nothing, it is not sufficient to take care of most seniors these days. While many retirees continue to grapple with the increasing costs for basic needs, such as housing, food and health care, some say even a modest COLA hike will not be enough.
Indication of a lower COLA
The expected lower COLA has spurred discussions on the consequence it will have on the seniors who rely solely on Social Security as the major source of their income. According to TSCL’s 2024 Retirement Survey:
- Rising expenses: Approximately 65% of seniors reported monthly expenses that were over $2,000 an increase of about 55%, compared to the previous year.
- Higher costs: Almost 80% of senior households reported that during the past year, budgets for such essential items had gone up.
These are absolute indications that many of the older Americans continue to enjoy economic security even as they receive Old Age Social Security benefits.
Experts’ concerns and predictions
Although some forecasters said the COLA could be pushed even higher-possibly to 3%-by an uptick in inflation, others are skeptical. Mary Johnson, a retirement policy analyst, pointed out that 2.5% would be the lowest rise since 2021. “The items seniors need to buy to live are slowly going up and squeezing finances,” she said.
Any increase is obviously welcome, but given today’s economic conditions, it’s just not going to be enough,” said Burt Williamson of PlanPrep. He was concerned that a lower-than-anticipated COLA might dampen what already has been a rough year for seniors.
Community reactions and discussions
This has been a hot topic of debate even on Reddit, where people vent about the miserly rate of COLA adjustments in the face of increased living costs. Most of the users there have said that any rise is welcome but usually feels a bit far from their real expenses. Another Reddit user had to say that “the adjustments for the elderly and the veterans should be of utmost priority,” showing larger needs towards vulnerable groups of people.
