Bad news for Social Security claimants in 2025. Participants should not expect a large COLA in their checks. Recent projections from the nonprofit Senior Citizens League put the COLA at 2.6%. This is lower than July’s 2.7% projection and last year’s 3.2% adjustment.
The COLA prediction was lowered due to falling inflation. Easing inflation is beneficial for the economy but lowers Social Security beneficiaries’ COLA. lessen inflation rates reduce price rises, but they do not lessen the cost of food, electricity, and housing, which many seniors cannot afford.
CPI-W determines COLAs. This index tracks price fluctuations for food, energy, and healthcare. The federal Bureau of Labor Statistics reports it monthly as a component of the CPI.
In the 2024 Social Security and Medicare Trustees Report, the SSA issued salary base forecasts for 2025–2033 based on the predicted COLA. The 2025 salary base is estimated to rise from $168,600 in 2023 to $174,900–175,500 in May 2024. The wage base is the maximum Social Security-taxed income.
The COLA is based on July, August, and September CPI-W inflation. The SSA calculates the Social Security payment increase for the future year, therefore these months are crucial. Compare average prices in the third quarter of the current year to those in the same quarter last year to calculate the COLA. Thus, the final 2025 COLA may vary dependent on inflation data for those months, with the official value due in October.
There have been attempts to modify the COLA calculation to reflect senior expenditures. Moving the COLA calculation from the CPI-W to the Consumer Price Index for Americans Age 62 and Over (CPI-E) would benefit seniors more. Because it emphasizes medical costs, which are a growing burden for older persons, the CPI-E is thought to better reflect their costs.
These proposals have failed, and time is running out for the current administration to make meaningful reforms before the November general election. If beneficiaries expect the system to work, changes must be made immediately.
Projected COLA for the 2025 Social Security Increase
Right now, the July CPI data shows that the COLA for 2025 will be 2.57%. This is the first of three sets of numbers that will eventually decide the final COLA. Like always, the raise will be added to Social Security checks starting in January 2025. These payments may sometimes come a little early than normal because of holidays or weekends, but they are usually due in January.
When the SSA releases its official numbers in October, the exact amount for 2025 will be known for sure. Until then, the expected COLA could change based on August and September inflation.