Lower COLA Increase Projection for 2025 Revealed

Inflation data in May prompts predictions for 2025 Social Security cost-of-living adjustment (COLA), with the Senior Citizens League predicting a 2.57% decrease from 2024's 3.2% COLA.

COLA Increase Projection: The inflation data for May, which was recently disclosed, has prompted predictions regarding the 2025 Social Security cost-of-living adjustment (COLA). The Senior Citizens League (TSCL) has projected that the 2025 COLA could be 2.57%, which represents a decrease from the 3.2% COLA in 2024.

Alex Moore, the Social Security and Medicare actuary at TSCL, stated that this would cause a significant decrease and a lower adjustment than the previous year. The organization initially anticipated a slightly higher COLA of 2.66% for 2025.

Conversely, Mary Johnson, an independent Social Security and Medicare policy analyst who employs an alternative methodology, anticipates a marginally higher 3% COLA for 2025, which remains below the 2024 adjustment.

The Bureau of Labor Statistics’ consumer price index (CPI) data for May, which reflected a 3.3% increase in inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) over the previous 12 months, is the basis for these estimates.

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It is anticipated that the 2025 Social Security COLA will decrease to 2.57%

The actual COLA for 2025 may differ from these projections, as it will be determined by the average inflation rate during the third quarter, specifically July, August, and September. This will be determined by the percentage change in the CPI-W from the same period a year ago. The annual COLA is generally disclosed in the middle of October each year.

Johnson and TSCL question the reliability of the CPI-W in computing the annual COLA. They say it doesn’t represent retirees’ cost increases. As the CPI-W grew 3.3% last year, Johnson observed that the current computing process may mislead inflation.

The complex COLA, which impacts millions of Social Security-dependent retirees, shows the gravity of these forecasts and concerns. Retirement funds will be affected by the 2025 final adjustment. These modifications must be assessed for retirees’ ability to pay living expenses until October.

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