In just two weeks, Social Security recipients will learn the official 2025 cost-of-living adjustment (COLA), which will impact millions of retirees. The COLA aims to help beneficiaries keep pace with rising living costs, but concerns linger about whether the adjustment will be sufficient to counter inflationary pressures. Social Security remains a crucial source of income for over 50 million retirees, with many relying on it as their primary or significant source of income.
Inflation’s Role in COLA Calculations
The Social Security Administration (SSA) calculates COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This metric, provided by the U.S. Bureau of Labor Statistics, tracks inflation across various sectors. However, critics argue that CPI-W may not accurately reflect retirees’ expenses, particularly in areas like healthcare, where costs often rise faster than general inflation.
For example, recent COLA increases, such as the 8.7% adjustment in 2022, provided significant relief, but many retirees still find themselves struggling to keep up with expenses. A report by The Senior Citizens League (TSCL) estimates that Social Security benefits have lost 20% of their purchasing power since 2010.
For more detailed information about the upcoming COLA, visit the Social Security Administration website.
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2025 COLA Projections
The 2025 COLA is expected to be modest, with a projected increase of 2.5%, according to TSCL. This would be lower than the 3.2% adjustment in 2024, raising concerns about its ability to offset rising costs. While any increase is welcome, many retirees are left wondering if it will be enough to meet their financial needs in the coming year.