How can the 2025 COLA for Social Security survive inflation according to experts?
The cost-of-living adjustment for 2025 is expected to be one of the lowest in recent years. How can Social Security beneficiaries survive inflation?
The latest estimates for the cost-of-living adjustment for 2025 indicate that Social Security checks could see their lowest annual increase in four years.
The Senior Citizens League, a non-partisan group looking out for the rights of seniors, predicts that the COLA for next year would be about 2.57%, which is almost 20% lower than the 3.2% COLA for 2024. The lower rate is due to easing inflation.
These estimates can change every month, depending on the inflation rate of the previous month. The Social Security Administration usually announces the adjustment in early October, while the new amounts take effect in January of the following year.
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What is the purpose of the cost-of-living-adjustment (COLA)?
The cost-of-living adjustment was implemented for Social Security benefits to make sure that retirees and other people living on fixed incomes would not lose their purchasing power when prices go up due to inflation. The COLA determines how much bigger monthly payments for recipients would be.
COLA rates are based on the CPI-W, or the Consumer Price Index for Urban Wage Earners and Clerical Workers, which measures the average inflation rate over time for consumer goods and services.
The Senior Citizens League says the retired and the elderly are concerned that persistent high prices caused by inflation will eat away at their savings.
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How can the 2025 COLA for Social Security survive inflation according to experts?
Seniors want Congress to pass a law that would base the annual cost-of-living adjustment on the CPI for the Elderly (CPI-E), which is a price index that takes into account expenses for seniors.
They say the CPI-W, which is currently being used, is targeted to the general population, and does not consider their specific needs, such as increasing medication and health care costs.
There has been a proposed bill pushing for this change of computation from using the CPI-W to the CPI-E, but the legislation has not gone far in Congress.