2025 Social Security Cost-of-Living Adjustment: What You Need to Know
Understanding the 2025 Social Security COLA
The Social Security Administration announced a 2.5-percent cost-of-living adjustment (COLA) for 2025, marking a modest response to easing inflation
Trends in COLA Increases
- Last year's COLA was 3.2 percent.
- In 2022, the increase reached 8.7 percent.
- In 2021, the change was 5.9 percent.
The adjustments are calculated based on the Labor Department’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The Impact of Inflation
Currently, the September CPI-W shows a 2.25-percent annual increase, compared to 3.56 percent last September and 8.46 percent in 2022. This decline highlights the ongoing transition of the economy from post-pandemic inflation.
Factors Influencing COLA Adjustments
Factors such as rising interest rates and stimulus absorption have played a role in the fluctuating inflation rates. As inflation decreases, the Federal Reserve has begun cutting rates to stimulate growth.
Executive Sentiment on Future Prospects
Despite these adjustments, a recent survey indicates that 61% of business executives anticipate a recession within the next six months.
However, U.S. economic data has shown strength with a 3-percent growth in Q2 GDP, and a declining unemployment rate.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.