Recently, there have been a number of predictions made about the new cost of living adjustment (COLA) for 2025. After months of waiting, the Bureau of Labour Statistics will finally announce the official COLA increase.
This will affect all levels of payments for widows, disabled people, and people who get Supplemental Security Income (SSI). The cost of living adjustment is one of the most important news stories for people in the U.S. who depend on Social Security to pay their monthly bills, since it determines how much these payments will rise next year.
Most people would like a big rise, but because the COLA rise is based on inflation figures, this isn’t always possible. The cost of living adjustment (COLA) is meant to look at data on inflation and give people a rise to help them deal with rising costs of living.
It is important to remember, though, that the next COLA % won’t be as big as many people think it will be if inflation goes down. It’s not all bad news for people who get Social Security. If inflation goes down, they won’t lose buying power, and their checks may still be enough to cover all of their costs.
The COLA announcement for 2025 is finally here
Seniors are especially aware of this yearly change because the yearly COLA increase means they should be able to keep up with rising prices. Some people say that the annual rise in the COLA, which in the past few years has been as high as 8.7%, is not enough to keep up with inflation.
According to a poll by the Senior Citizens League, 69% of people said that housing and food were the main costs for their family over the past year, which is more than the COLA.
As we already said, different financial experts and the Senior Citizens League, a neutral group for seniors, have given their predictions for the next cost of living increase in 2025 over the past few months. As time went on, predictions started out with optimistic percentages above 3%, and sometimes even higher than this year’s 3.4% COLA raise. But as time went on, these predictions tended to get lower along with inflation.
For example, one of the most recent predictions, made in August, said that the COLA increase in 2025 would be about 2.57%. However, this number dropped to 2.5% in September. The FED chose to cut interest rates, which hadn’t happened in a long time, along with lowering inflation.
Because of this, the COLA raise today is likely to stay around 2.5% or even go down. The important thing for beneficiaries to know is that they will still get their yearly rise, which will start in January 2025.
For millions of Americans, especially retirees who have been worrying that their monthly benefits are not enough to cover their costs and health care costs, a 2.5% COLA increase may seem like a small amount. However, this annual increase will help them keep their purchasing power.
Beneficiaries should also know that this 2.5% rise means that the average cheque for retirees will go up by $48; for SSI recipients, it will go up by $17; and for survivors and disabled people, it will go up by $38. Still, the biggest increase of $12 will only be available to retired workers who choose to wait until they turn 70 to start getting benefits. This way, they will get the biggest Social Security payment of $4,873.
How much will the exact cost of living be adjusted for January 2025?
It took months, but the Bureau of Labour Statistics finally announced a 2.5% COLA raise for 2025. This is in line with what Americans were expecting based on recent predictions. After today’s approval, beneficiaries will not see this yearly increase on their checks until January 2025. Because of this, the last few payments for the year won’t include this raise.