2025 Social Security COLA forecasts trend upward as prices continue to rise

Last week, the Bureau of Labor Statistics released the April Consumer Price Index (CPI) report, which showed that consumers were paying 0.4 percent more for goods and services than the month before.

The Social Security Adminstration (SSA) uses the CPI for Salaried Workers in Urban Areas and Administrative Workers (CPI-W) to calculate the Cost-of-living adjustment offered to recipients of its programs each year. As of April, the year-over-year increase tracked by the CPI-W was 3.4 percent.

In the run-up to October, when the COLA for the following year is announced, various organizations estimate how high the increase in benefits will be. One of the most trusted forecasters is the Senior Citizens League, which adjusted its COLA projection from 1.75 percent to 2.66 percent. This would be lower than the 2024 COLA by 0.6 percentage points, making it the lowest seen in the last five years.

The financial well-being of seniors hangs in the balance

The senior rights organization has been raising alarms over the financial well-being of many seniors who rely on Social Security throughout the inflationary crisis in the US and worldwide. Last year, a survey conducted by the group found that 71 percent of households had seen their expenses rise above the 3.2 percent COLA offered this year. Shannon Benton, the organization’s Executive Director, argues that if the COLA falls to 2.66 percent, “seniors will continue to suffer financial insecurity as much next year as they have this year.”

How is COLA calculated?

To determine the COLA, the SSA compares the CPI-W for the third quarter of the year—July, August, and September—last year to the CPI-W for the current year’s third quarter. The difference between one and the other will be the equivalent of the increase in COLA. In 2023, the increase was 8.7%, the biggest increase in four decades.