A new COLA estimate was just released, but it might not be what beneficiaries, especially retirees, were hoping for as October gets closer. Mary Johnson, a policy analyst who works independently for Social Security and Medicare, thinks that the Cost of Living Adjustment (COLA) for retirement and disability payments in 2025 will be 2.5%.
This is less than the 2.57 percent that was predicted in August. If someone gets $1,900 a month from the Social Security Administration (SSA), Johnson thought that their payment would go up by about $46.80 in the next year.
The COLA prediction brings bad news for retirees collecting Social Security checks
Johnson told Newsweek that the COLA for Social Security retirees in 2025 will be the lowest it has been since 2021. At the same time, Johnson said that prices for things like housing, groceries, car insurance, and any kind of service or repair would keep going up.
Even though it’s the lowest COLA estimate since 2021, 2.5% is still a pretty normal rate. This is to remind you that the official COLA statement is on October 10. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rates for the third quarter of the year (July, August, and September) are used to figure out benefit improvements.
The CPI-W tracks how much working Americans spend. Johnson also said that there is a 17% chance that the COLA will be higher than 2.5% in 2025. Thirteen percent of the time, it will fall below this amount.
How is the cost of living adjustment (COLA) calculated every year?
The COLA is found by taking the sum of the CPI-W for the third quarter of this year and the same quarter the previous year. If the price of living goes up, the number is rounded to the next tenth of a percent. This is called the new cost of living adjustment (COLA).
The payments to claimants will go up by 3.4% in 2024, which is the same as the CPI-W in 2023. Because the coronavirus pandemic led prices to rise so quickly, retirees and other beneficiaries will get an increase of 8.7 percent in 2023.
This has never happened before. Usually, benefit raises happen once a year, but sometimes they don’t. Since the inflation rate didn’t go up between the third quarter of 2014 and 2015, Social Security payments didn’t go up in 2016.
Your monthly Social Security benefits will go up for everyone who is eligible for retirement, survivor, Social Security Disability Insurance (SSDI), or Supplemental Security Income (SSI) benefits as soon as this annual number is set. No matter how big the official raise is, only people who get SSI benefits should expect to see their checks go up starting in December.
This is because January 1st is a holiday. After that, the new Social Security checks will start coming in January 2025, as planned by the Social Security payment schedule for that year. There isn’t yet an official cost of living adjustment percentage, but here are the future Social Security checks that people will get if the 2.5% COLA estimate comes true:
| Retirement benefits | Social Security checks | 2.5% COLA prediction |
| On average | $1,900 | $1,948 |
| Age 62 | $2,710 | $2,778 |
| Age 67 | $3,822 | $3,918 |
| Age 70 | $4,873 | $4,995 |
| Survivor benefits | Social Security checks | 2.5% COLA prediction |
| On average | $1,505 | $1,543 |
| Individual | $1,773 | $1,817 |
| 2 Children | $3,653 | $3,744 |
| Disability benefits | Social Security checks | 2.5% COLA prediction |
| On average | $1,537 | $1,575 |
| Blind recipients | $2,590 | $2,655 |
| Maximum payment | $3,822 | $3,918 |
| SSI benefits | Social Security checks | 2.5% COLA prediction |
| On average | $698 | $715 |
| Individuals | $943 | $967 |
| Couples | $1,415 | $1,450 |
| Essential person | $472 | $484 |
Remember that this is just a guess based on the 2.5% COLA prediction. This means that Social Security checks could go up or down depending on the official number that is released in the second week of October.
Also See:- Increase Social Security benefits by $450: Retirees can get it one way, not through COLA