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Updated 2025 Social Security COLA forecasts: What you need to know
The Senior Citizens League has updated their forecast for the increases in the size of senior benefits for next year and its far higher than their last.
In mid-October, the Social Security Administration (SSA) will reveal the Cost of Living Adjustment (COLA) for 2025. This is crucial for ensuring senior benefits keep track with inflation, preventing them from falling in to destitution.
According to the measurement for inflation, the Consumer Price Inded (CPI-W), prices have increased by 1.5 percent since October 2023. To exceed the COLA offered this year, prices would have to increase by an additional 1.7 percent by the end of September, or at least 0.28 percent each month. In February, the Senior Citizens League (SCL) estimated that the 2025 COLA would be 1.75 percent.
However, since that article was published, prices have continued to rise, with the total captured by the more general CPI in February, March, and April already adding up to a 1.1 percent increase. The SCL has thus updated their estimate, now predicting a COLA of 2.6 percent.
How the COLA is calculated
The COLA will be based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) numbers for July, August, and September. The CPI-W is an indicator of inflation published by the Bureau of Labor Statistics (BLS) and differs from the more commonly used CPI for All Urban Consumers (CPI-U), which tracks inflation across markets for goods and services.
To calculate the COLA, the SSA compares the three-month average of the CPI-W to the same period of the previous year. If the prices have risen, the percentage increase is added to the benefits each year. The COLAs have been more generous in the last two years than in previous years. The SSA applied a 3.2 percent increase to benefits in 2024, and a whopping 8.7 percent boost was tacked on in 2023.