2025 Social Security COLA announcement a week away: Here are the latest forecasts

The Senior Citizens League, a senior rights organization, has projected a 2025 cost of living adjustment (COLA) of 2.5 percent for 2025.

The Bureau of Labor Statistics reported a 0.2 percent increase in the Consumer Price Index last month, with annual inflation also sitting at 2.5%.

The 2025 cost of living increase (COLA) will almost certainly be lower than the 3.2 percent increase offered to those receiving Social Security benefits in 2024. While the rate of price increase slowed over the last year, it continued to rise, putting pressure on Social Security beneficiaries, many of whom have little power when confronted with inflation and its destructive impact on purchasing power.

How does the Social Security Adminstration calculate the COLA?

The Social Security Adminstration (SSA) uses the CPI for Urban Wage Earners and Clerical Workers (CPI-W) to calculate the COLA and compares the third quarter average (July, August, and September) to the average from the same quarter in the previous year.

Though June saw prices fall for the first time since May 2020, those decreases were erased by the July increase of 0.2 percent. The CPI-W average for the third quarter in 2023 was 301.235, and if we compare that figure to the one recorded in July 2024, average prices have risen 2.4 percent.

While the news from the BLS means that the COLA applied to benefits next year is likely to be smaller than that offered this year, a decrease in the CPI will provide much-needed relief to households, and in particular seniors on a fixed income, who often feel the pain of inflation more acutely as they have very few options to increase their income to regain purchasing power.