Social Security COLA for 2025 Could Be Over 2.6%, According to New Predictions

Thanks to the latest inflation data, Social Security beneficiaries are now projected to get a 2.63% raise for 2025.

That's according to The Senior Citizens League, a nonpartisan group that puts out a monthly estimate for the annual cost-of-living adjustment (COLA). That 2.63% forecast is a slight increase from last month's prediction, which was 2.57%, according to a news release.

Federal data released Thursday indicates that headline inflation cooled to 3% in June. But COLA calculations are based on a metric called the consumer price index for urban wage earners and clerical workers, or CPI-W. In June, the CPI-W was 2.9% year over year.

Latest Social Security COLA predictions for 2025

The actual, final COLA for 2025 won't be announced until October, so fluctuations in these projections are very common (and closely watched, given that roughly 68 million Americans receive Social Security payments). The estimates not only vary month to month but also from expert to expert.

Mary Johnson, an independent Social Security and Medicare policy analyst who retired earlier this year from The Senior Citizens League, says she forecasts a 2.7% COLA for 2025 based on the latest inflation numbers. This is a dip from last month, when Johnson predicted a 3% COLA.

In an email Thursday, she also pointed out that "persistently high prices" for certain categories of goods and services often purchased by older, retired and/or disabled Americans are "causing distress." For example, food prices are up 2.2% from last year, and shelter has jumped 5.2%. Crucially, the cost of hospital services has risen 7.1%, and the cost for elderly care at home is up a whopping 11.4% from last June.

The Senior Citizens League surfaced a similar concern, writing that "although easing inflation should relieve older consumers, the rapidly increasing price of groceries the 2020s have seen thus far mean financial relief is still far away."

When will the 2025 COLA be announced?

The Social Security Administration will calculate the official COLA by taking the average inflation rate during July, August and September of 2024 and comparing it to that average from 2023. The difference will be the benefits adjustment.

That means this month's inflation data will be the first to have a direct impact on the 2025 COLA. In terms of a specific date, the COLA announcement usually happens the same day the Bureau of Labor Statistics drops its September inflation numbers. This year, that's Oct. 10.

It may seem counterintuitive, but because many of them are on fixed incomes, Social Security recipients often end up crossing their fingers for stubborn inflation.

In general, high inflation equals a high COLA. For instance, after inflation spiked in 2022, the government rubber-stamped a huge 8.7% raise for Social Security beneficiaries for 2023: the biggest increase 1981. As inflation gradually calmed down last year, recipients got a 3.2% COLA for 2024.

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