FINANCE
2025 Social Security COLA: What we know about the increase in benefits so far
Next week, we will receive more data to better calculate how high the 2025 COLA increase could be. Here is what we know so far.
Next week, the Bureau of Labor Statistics will release the May Consumer Price Index (CPI) report, providing seniors with greater insights into the 2025 Cost-of-living Adjustment, commonly known as the COLA, that they could see tacked onto their Social Security benefits next year. This year, the Social Security Adminstration (SSA) offered retirees and other beneficiaries of their programs a 3.2 percent increase, based on price level changes tracked by the CPI for Urban Wage Earners and Clerical Workers (CPI-W). This followed a historic 8.7 percent increase in benefits in 2023 after inflation had risen quickly and significantly, leading to rapid decreases in the purchasing power of those relying on SSA benefits.
The Federal Reserve Bank of Cleveland has released its May CPI forecast of 0.1 percent, which would further bolster the SCL’s projected 2025 COLA as it would show that inflation is slowing and that the benefits increase is likely to be lower than that seen this year.
How high could the 2025 COLA be?
The Senior Citizens League (SCL), an organization that advocates for seniors’ rights to a dignified life, has released its 2025 COLA forecasts. The projected increase is expected to be around 2.6 percent. However, this could change since there are still four months’ worth of data to consider that have yet to be released. The most recent projection released by the organization was increased from 1.75 percent after the BLS released a series of CPI reports that showed that inflationary pressure continues to exist within the market for critical goods and services, namely, housing and energy.
Read more from AS USA:
How does the SSA calculate the COLA?
The SSA calculates the annual COLA by comparing the average of the CPI-W for July, August, and September to the figure recorded for the same period a year earlier. The 2023 quarterly average for the CPI-W these three months was 301.253. In April, the CPI-W clocked in at 307.811, and if the COLA was based on comparing those two figures, an increase of 2.1 percent would be offered.