Projected 2025 Social Security COLA Increase: What's Ahead for Retirees

Projected 2025 Social Security COLA Increase Explained

The 2025 social security cola increase is anticipated to be 2.5%, offering retirees an average monthly bump of $48. According to the Senior Citizens League (TSCL), this forecast comes as the government reports a 2.5% price rise over the past year.

Understanding the Impact of Inflation

• The cost-of-living adjustment (COLA) is determined by inflation: if the inflation rate increases compared to the previous year, so too does the COLA.
• The Social Security Administration usually finalizes the COLA figure in mid-October based on three months of inflation data.
• The expected 2025 COLA is below the 3.2% increase received in 2024, yet it aligns with the historical norm of around 2.6% over the last two decades.

Key Takeaways for Social Security Recipients

1. Current projections suggest recipients can expect an average monthly benefit of $1,968.
2. Yearly adjustments have fluctuated significantly, with rates ranging from 0.0% in 2010, 2011, and 2016 to an impressive 8.7% in 2023.
3. The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).