Following is the expected meager hike in COLA for 2025 and the estimated $48 average increase of the monthly benefits. Not all states are going to feel the change in value similarly. As a matter of fact, various states are going to reflect a far smaller increase in the Social Security benefits owing to their particular economy-based factors.
Of these, Mississippi can be expected to see the smallest hike in Social Security benefits that this year’s COLA adjustment will bring about.
How COLA works: Understanding what it is
The COLA was designed as a tool that would enable Social Security recipients to maintain their purchasing power during times of inflation. It is based on the action of the Consumer Price Index for Urban Wage Earners and Clerical Workers, meaning the average change over time in prices paid by consumers for consumer goods and services.
The COLA usually is announced every October and takes effect in January of the following year. This adjustment will make sure that retirees, disabled people, and other beneficiaries can keep up with inflation, which seriously cuts into their ability to pay for basics such as food, housing, and healthcare.
Over the last years, COLA adjustments have gone all over the place depending on the rate of inflation. Last year, the COLA was 8.7% in response to inflated inflation, but for 2024, that dropped down to 3.2%. Projections show that the next adjustment for 2025 will be very close to 2.5%, reflecting how much inflation has slowed.
Why Mississippi will see the least increase
Following are some of the special economic reasons that may account for the relatively lower increment of Social Security benefits in Mississippi.
- Mississippi: It has one of the lowest median household incomes in the country.
- Economic conditions: Mississippi is an economically deprived state, which basically means that when it comes to calculating COLA, the base is lower compared to other states whose income and living standards are higher by a mile.
- Cost of living: Mississippi was considered to have a pretty low cost of living when compared to the majority of states, which in turn would affect the way COLA adjustments were perceived and implemented. The fact that it sounds this good is because even a small percentage increase may not equate to significant financial relief for the beneficiaries.
- Demographics: Mississippi has a greater percentage of its population that consists of older citizens who depend more on Social Security as their primary source of income. This demographic reality creates even small increases to hurt deeper in relation to ever-climbing costs associated with basic goods and services.
Projections from advocacy groups, like The Senior Citizens League, estimate that while many states are on target to see average increases in line with national trends, Mississippi’s unique economic landscape means its residents might feel less impact from the upcoming COLA adjustment.
Other States comparison
While Mississippi is expected to see the least increase, other states are also projected for modest adjustments:
- Louisiana: As with Mississippi, the state’s economic climate would also favor lower than average increases in the state.
- New Mexico: New Mexico’s economic base is relatively diversified; however, the state’s historical reliance upon various federal support programs may also favor lower increases for recipients of Social Security.
- District of Columbia
- Kentucky
- Alaska
- Arkansas
- Maine
- Montana
- California
In contrast, states with a high cost of living and medium income, such as California or New York, would have much bigger increases due to the higher cost inherent in the calculations on the CPI-W.
Plan ahead for changes
Until the COLA for 2025 is announced, beneficiaries face the fact that COLA increases to their monthly benefits are very small. As the cost for just about everything in daily life goes up, learning how and why these changes take place will help the average person budget and plan better for their futures.
That upcoming COLA reminds us that ongoing advocacy in support of policies for vulnerable populations is the most important thing there is, especially for seniors dependent on Social Security as their primary source of income. As inflation continues to evolve, so too should our approach in making sure all Americans can live out their retirement years in dignity and financial security.
