Cleveland, Ohio – The recent estimates regarding the cost of living adjustment (COLA) have left many seniors in the United States feeling disappointed. The Social Security Administration (SSA) typically announces the new COLA increase in October each year.
The Senior Citizens League has revised its estimate for the 2025 COLA, setting it at 2.4 percent. This increase has raised concerns among beneficiaries who worry that it may not be sufficient to cover the rising costs of everyday expenses due to inflation.
If confirmed, the 2.4 percent COLA increase for 2025 would lead to a rise in Social Security benefits in January. However, forecasts suggest that the increase is modest due to relatively low inflation rates in recent months. The expected adjustment would be the lowest since 2017, resulting in an average monthly benefit increase of only $37.
Every year, Social Security benefits are adjusted for inflation using data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index tracks changes in the costs of products and services commonly purchased by clerical and urban wage earners. Approximately 70 million Social Security recipients, including retired workers, survivors, and individuals with disabilities, are affected by the COLA adjustments.
In 2023, Social Security benefits for elderly individuals and those with disabilities increased by up to 8.7 percent. However, the following year saw a smaller increase of 3.2 percent in COLA, translating to around a $50 raise for most beneficiaries. The adequacy of future COLA increases in offsetting the full impact of inflation is a pressing concern for the Social Security Administration, as failing to do so could erode the purchasing power of beneficiaries over time.
Alex Beene, a financial literacy instructor in Tennessee, highlighted the frustrations felt by seniors when facing inflation. Rising prices, particularly on essential items like groceries, have caught many retirees off guard. The escalating costs of housing and healthcare, with annual increases of 5.7% and 1.1% respectively, have left many seniors feeling dissatisfied with the inflation rate.
A study by the Senior Citizens’ League revealed that nearly all of the seniors surveyed reported ongoing price increases for their household items. The majority experienced monthly expenses climbing by over $59 in 2023, with some facing hikes exceeding $185. Concerns are growing among seniors that the anticipated Social Security benefit increase may not adequately keep up with future inflation, leading to potential tax implications for many as their income tax rates rise.
Data from the National Council on Aging has underscored the financial vulnerability of nearly 25 million Americans aged over 60, many of whom rely heavily on Social Security benefits to cover their living expenses. For these individuals, the potential insufficiency of future benefit increases poses a significant challenge in the year ahead.