WASHINGTON, DC – A forecasted drop in Social Security cost-of-living adjustments (COLA) for 2025 is likely to impact seniors as they struggle to keep up with rising prices and expenses. According to estimates, the increase in Social Security benefits may only reach 2.5%, falling behind the moderating inflation figures. The forecast comes from the Congressional Budget Office (CBO), which predicts a 2.5% increase, slightly higher than the 1.75% estimated by the Senior Citizens League (TSCL).
The 2024 COLA saw a 3.4% increase, providing beneficiaries with an extra $59 monthly. However, this increase is lower than in previous years, such as the 8.7% increase in 2023 and the 5.9% increase in 2022, which were the largest seen since the early 1980s due to record-high inflation. The final 2025 COLA may differ from the estimates, as it is calculated based on the average rate of inflation during the third quarter. This leaves room for fluctuations, with more data to be taken into account in the coming months.
The anticipated decrease in the cost-of-living bump is likely to fall short of meeting the financial needs of many seniors. A survey by the Senior Citizens League found that nearly three in five seniors collecting Social Security are struggling financially, with 62% stating that the 3.2% COLA increase for 2024 was insufficient to cover their expenses. Additionally, a significant number of seniors are considering rejoining the workforce, with 40% planning to find work to supplement their income.
As a result of the forecasted lower COLA, many seniors may face challenges in managing their household spending. This has sparked a need for more robust measures to support the elderly, especially those who are single or in need of additional financial assistance. Additionally, due to the potential increase in taxes on Social Security benefits, retirees may need to consider managing their debts to reduce their interest rates and monthly expenses.
The forecasted decline in the COLA for 2025, combined with the possibility of more Social Security recipients owing taxes on their benefits, underscores the financial challenges faced by many seniors. With the widening gap between Social Security benefits and the rising cost of living, there is an urgent need for greater support for the elderly in managing their finances and maintaining their quality of life.